The Five Best Ways to Improve Your Credit Score

A good credit score is your ticket to easy credit approval and low interest rates. Your score comes from credit report data compiled by TransUnion, Experian and Equifax, so if you improve your financial management practices, your reports reflect more positive information. Good credit bureau records translate into a credit score improvements.

Pay Bills on Time

Your bill payment records contribute 35 percent to your credit score, according to the MyFICO scoring company, so the best way to improve your score is bringing any late accounts up to date and ensuring that all future bills get paid on time. Put reminders on your calendar for bill mailing dates or set up automatic payments from your bank account. The current prompt payments eventually outweigh past delinquencies and pull up your score.

Lower Revolving Debt

Too much credit card debt lowers your credit score, so MSN Money writer Liz Pulliam Weston recommends paying down what you owe until you reduce the amount to 10 percent of your total available credit limits. Thirty percent is acceptable, but 10 percent has the best effect on your score.

Use Older Credit Cards

Your FICO score improves when you keep older accounts active. The length of your overall credit history influences your score. Pulliam Weston recommends occasionally using all of your cards to generate current record records. Do not rack up large balances or that will offset the positive effect. Charge inexpensive items you can readily pay off.

Diversify Your Accounts

Your credit score improves if you have a mixture of account types, rather than just credit cards or loans. Open a credit card if your only accounts are installment obligations mortgages and auto loans. Get a small personal loan if your credit use is currently restricted to revolving accounts. Pulliam Weston advises that the best source for installment credit is your current bank or credit union. Do not open too many accounts all at once or you will hurt your score.

Eliminate Reporting Mistakes

Many credit reports contain obvious mistakes, like incorrect payment dates that make up-to-date accounts look delinquent. MSNBC writer Bob Sullivan warns that 25 percent of consumer credit reports are inaccurate. Some mistakes are less obvious but still hurt your credit if you do not correct them. For example, Pulliam Weston warns that under-reported credit lines make your debt to available credit ratio look bad. AnnualCreditReport.com gives free report copies on request every year from TransUnion, Experian and Equifax. Review them and complain to the credit bureaus about every potentially harmful error. A consumer protection law called the Fair Credit Reporting Act requires the bureaus to investigate and fix or delete mistakes.