Five Ways To Improve Your Credit

Credit scores range from 300 to 850. The median score is around 725, although a score of 760 or higher will get you the best (lowest) interest rates. Few consumers score above 800. Here are five suggestions on how to improve your final credit score. Following these suggestions your FICO score will improve within 13 to 24 months.

1. Pay your bills on time. Payment history accounts for roughly 35% of your score. So paying bills on time is the most important thing you can do. If you're behind, get caught up and then stay current. If you're struggling, contact your creditors to work out a payment schedule.
   
2. Increase the length of your credit history. It accounts for 15% of your score. Canceling an old card or getting a lot of new credit within a short time span can hurt your score because it lowers the average age of your accounts.
   
3. Keep credit card balances low. Credit utilization makes up 30% of your credit score. Try to keep the amount you borrow below 25% of your available credit. Even if you pay off your credit cards every month, the average balance will still impact your score.
   
4. Minimize new credit requests. They account for 10% of your credit score. Every time a potential lender asks for a copy of your credit report an inquiry is recorded. If you will be applying for a loan in the near future, don't apply for any new credit cards beforehand. You can also ask the three main credit reporting agencies — Experian, Equifax and Trans-Union—to stop unsolicited credit offers.
   
5. Maintain different types of installment and revolving debt. About 10% of your score depends on the type of credit used. How you handle revolving credit (like credit cards) carries more weight than how you deal with installment debt (such as car loans and mortgages).