How to Raise Your Credit Score

Unfortunately, a small, rather simple mistake can have a large and long-lasting impact on your credit score. Here are some practical tips on how to avoid such mistakes and raise your credit score.

1. Do not miss payments. Sounds like common sense, sure. But what many people fail to realize is that some creditors report late or missed payments to the credit bureaus almost immediately. People also fail to realize that these simple late or missed payments can lower your score dramatically. In order to avoid this, stay on top of your bills and always pay them timely.

2. Do not max out your credit cards. Okay, so you have mastered paying your bills on time. Great. But how much available credit do you have left on those credit cards? If the answer is "little" or "none," you are lowering your credit score, perhaps without realizing it. Maxing out your credit cards can have a devastating effect on your credit score. You can, in fact, raise your credit score by requesting and receiving higher credit limits from your credit card companies.

3. Do not apply for too much credit. Applying for many credit cards in a short period of time will lower your credit score. In fact, each inquiry by a credit card company shows up on your credit report, and each inquiry lowers your score somewhat. In order to avoid having too many inquiries on your credit report, space out your credit card applications. Resolve to wait a month or two between completing credit card applications and take things slowly.

4. Do not close any credit card accounts. For some reason many people believe that closing their unused credit card accounts will help raise their credit score. Not so. In fact, closing unused credit card accounts lowers your credit score. By decreasing your amount of available credit, you are increasing your credit utilization and thereby lowering your credit score. The same logic applies here as it does to not maxing out your credit cards.