How to Improve Your Credit Score

If you are even the least bit financially savvy, you probably want to know how to improve your credit score. The fact is that your credit report goes a long way. Follow these tips on improving your score.

1. Keep a watchful eye on your credit reports. Once a year, look over reports from all three national credit bureaus-Equifax, Experian and TransUnion. Do the same several months before applying for a loan. Watch out for errors, as correcting a mistake on your report can take 30 days to three months, and even longer than that.
2. Reduce credit card balances. Your credit score definitely reflects how much money you owe on credit cards compared to your credit limit. In general, try to keep the balance at or below 25 percent of the limit.
3. Make timely bill payments. This is very important. It is also critical that you make prompt payments especially if you will be applying for a loan soon. A missed or late payment in the recent months can really lower your score.
4. Refrain from closing unused credit card accounts if you will be applying for a loan. This will raise your balance-to-limit ratio. Further, do not open new accounts, especially if you have a short credit history or only a few accounts. A new account may lower your score since you do not have a proven history and it might lower the average age of your accounts in general.
5. Stop moving debt around. Pay it off as much as you can. Transferring a credit card balance and closing out an account can lower your score. Therefore, think wisely before you move things around.