1. Avoid High Credit Card Balances
A good credit score usually falls upwards of 660 (and up to 850). Look at how much credit you’ve got available versus how much you’re actually using. The bigger the difference between those two numbers overtime, the better your score will be.
Aside from accumulating interest, this is another reason to keep those credit card balances low by paying them off quickly. A general rule of thumb is to use 30 percent of your available credit or less.
2. Get Rid Of The Tiny Balances
Even if you don’t have huge charges on one of your credit cards, tiny long term balances on one or more can affect your score in the same negative way.
This is a quick fix, though–simply gather your cards and pay off as many of the smaller balances as you can. You should then consider trying to limit how many cards you use so that you avoid the risk of forgetting payments.
3. Show Off Examples Of Your Good Debt
Often people try to hide past examples of debt that they’ve had by getting it taken off of their credit report. However, if you’ve paid off something big like a house or a car on time, these instances can act as past examples of times you’ve managed your credit well, and can actually end up helping you in the long run.
4. Shop For Loans In A Short Time Span
Whether you’re trying to obtain a loan or credit for your tuition, a house, or a new car, try to shop around for the best rate in the shortest time span possible, as the mere act of applying for credit frequently can cause a dip in your score for up to a year.
Fortunately, companies that hand out these types of loans use a FICO score, which does not include inquiries about obtaining new credit as long as it was within the past 30 days. Once you pass this period, your FICO score will take a hit, resulting in higher interest rates.
5. Stop Being Late On Your Bills Immediately
One of the easiest ways to bump up your credit score up is by simply paying your bills on time. On the other hand, one of the easiest ways to hurt it is by paying bills late consistently. This doesn’t mean just your rent, cable, and utility bills either, as even things like late library books have been shown to affect scores in certain instances.
6. Avoid Sending Warning Signs
Inconsistencies in how you treat your credit can be major indicators to lenders that you might not be worth the risk. In addition to missing bill payments, it’s also important that your spending doesn’t fluctuate too much.
If all of a sudden you start paying less of your balance each month or start charging more to credit, it sends a message that you aren’t as financially stable as you could be. For similar reasons, things like cash advances and even certain places you use your card can affect your credit score. For example, if you’re blowing a ton of money at a divorce lawyer’s office, it’s sometimes thought as an indicator that financial troubles might be on the horizon.
7. Don’t Move Too Frequently
Millennials are often known for living life on the go, frequently moving in pursuit of new jobs and adventures. While this lifestyle might be more fun, frequently moving can make you seem less reliable in the eyes of lenders. The longer you’re living in the same place, the better.
8. Monitor Your Credit Report (But Don’t Worry Too Much)
In order to prevent the unfortunate moment where you realize your credit score has suddenly dropped significantly, make sure you’re staying up to date with how it changes over time, paying close attention to any changes that may be the result of fraud.
However, there’s a fine line between monitoring and obsessing over it. While it’s smart to keep an eye out for changes, if you’re paying all of your bills on time and holding as little debt as possible, you probably won’t have much to worry about.
9. Pick The Right Cards
If you’re newer to the credit card game, it’s important to do your research on what types of different benefits certain cards comes with. Some will feature a lower interest rate while others might waive annual fees.
Certain benefits can be better for certain people. For example, if you think you’re going to hold a balance on your card, find one with a lower interest rate. Also keep in mind that while certain cards might have special perks like airline miles, high interest rates and random fees might make it not worth the special deal. Know the ins and outs of a card before you apply.
10. Don’t Be Scared To Use Your Cards
By making small purchases with your credit cards on a regular basis and paying them off on time, your credit score will reflect that you’ve had a good record of repaying debts. Think of small purchases that you might make on a schedule and put these on a certain card, whether it’s your monthly Netflix payment or Friday’s lunch every week. Routine will make it easier to manage your payment plans.
The Bottom Line
Your credit score will change over time, that’s a natural occurrence. However, take all precautions necessary in order to prevent a big surprise when you discover you’ve ruined your credit and have scared away potential lenders. By doing things like paying your bills on time, eliminating debt as quickly as possible, and by being proactive about building your credit, you’ll be considered a much more favorable candidate when you apply for a loan.
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