How to Build a High Credit Score

Building and maintaining a high credit score can be challenging under the best of circumstances. But knowing what variables the credit rating agencies look for can make the process much less difficult. Although the exact formula for determining your score is a secret, getting a good score requires more than just eliminating all of your debt.

Instructions

1

Control your spending. This is still the most important aspect of maintaining a good credit score. Don't give in to impulse buying, especially with big-ticket items like cars or boats. Be certain that you can comfortably fit the payment of anything you buy into your budget.

2

Keep at least some of your old credit card accounts open, even if you're not using them any more. The rating agencies will consider the number of accounts you have open, and if you close out all of your old accounts, then your ratio of outstanding debt to your total credit lines will diminish as will your score.

3

Limit the amount of money you spend on your credit cards. Never max out your credit card or revolving debt if you can help it. Try and limit your balances to no more than two-thirds of your credit limit. The rating agencies will look favorably on this and increase your score over time accordingly.

4

Make your payments on time, and pay off your credit card balances in full each month, if possible. This will not only prevent you from paying interest on your balances but will also improve your score over time. Avoid late payments, as a single late payment can make a sizable difference in your score.

5

Find out your credit score by pulling your credit reports from the three rating agencies. You can do this each year at the Annual Credit Report website. This is the only site that allows you to pull all three of your reports (from Transunion, Experian and Equifax) for free each year. Each agency will assign you a credit score from 350 to 850, based upon the amount of debt you carry and your record of paying it off on time. Each score will probably differ slightly; the middle score is often what lenders will use to determine whether you qualify for a loan. Check your reports to make sure that everything in them is accurate and current. Report any discrepancies to the appropriate rating agency immediately if you find items on them that are inaccurate.

6

Purchase identity theft protection to shield you from identity theft. Identify theft can ruin your credit score for years to come and cost you a great deal of time and money to deal with. Many financial institutions offer this kind of protection.