3 Steps to build credit score

Understanding how credit is calculated can help you to make specific moves to increase your credit score. There are easy things you can start doing now to help improve your credit score while there are other things you can do that will take some effort, but put you into that excellent credit score range.

Pay your bills on time. This is one of the best ways to increase your credit score. When you have a history of missed or late payments, your credit score is negatively impacted. If you start to consistently pay your bills on time though you will soon see your score start to increase. Making sure you automate your bill payments can help make sure you don’t forget to pay a bill one month.

Pay off some of your debts. This will help you have a lower credit utilization ratio. This ratio is important because having a high credit utilization ratio will negatively impact your credit score. When you have a high ratio, lenders see you as being maxed out on what you can borrow. If you have some savings try paying off some of your smaller accounts and then tackle the larger debts with a specific goal you set.

Increase your credit history and limit any new credit. Having a longer length of credit history can positively impact your credit score. This is one area that you can’t fix right away, but you can be conscious of it. When you take out a new account your credit history average will go down and this activity will stay on your credit for two years. Avoid taking out new forms of credit. This is one area that can boost your score to the excellent range over time.