Three Steps to Boost Your Credit Score

Your credit score is one of the most important elements of your financial background. It can affect issues such as your eligibility for credit cards and the interest rate assessed on your mortgage. Generally, lenders perceive a credit score above 700 as good. If you need to bring your credit score up, three financial strategies can help you boost your credit score quickly.

Pay Your Bills Right Away

It's critical that you start paying your bills by their due date. Late payments lower your credit score, and your credit score drops even further if the late payment issue is sent to a collections agency. Few things have a greater impact on your credit score than late payments, and Kiplinger financial magazine reported in 2010 that your ability to pay on time constitutes 35 percent of your total score calculations.

Lower Your Credit Usage

When your credit score is calculated, the percentage of the available credit you use is taken into consideration. Your score is impacted negatively if you use the majority of your available credit every pay period. Raise your score by cutting back on your credit usage or by paying off your credit card balances constantly. Keep in mind that this number is constantly changing. For example, your credit score is lower before your credit card balance payment is due, and it rises once you pay off your credit card, which increases the ratio of your available credit relative to the credit you've used. On average, people with very high credit scores--760 or higher--only use 7 percent of the credit they have available each month.

Check Your Credit Report for Errors

Errors in your credit report, such as incorrectly reported late payments or wrong names that may connect you to debt that's not yours, can lower your score. Fixing the errors is simply a matter of filing a correction form with the credit agency. You can order a free credit report once every 12 months by dialing toll-free 877-322-8228. The report is mailed to your home. Review it to make sure all the information listed is correct. If it's not correct, follow the instructions on the report to fix any erroneous details.

Other Strategies

There are additional ways to raise your score and keep it high. This includes not opening new lines of credit that you don't need, because your credit score takes into account the total "age" of your credit accounts. Your credit score is lowered when the average "age" of your accounts is reduced, and that "age" reduction typically more than offsets any credit score gain that would be made from lowering your debt percentage by increasing your available credit. Additionally, your credit score improves if you have several forms of credit, including revolving debt such as credit cards and installment debt such as a mortgage. This shows creditors you can handle a range of credit types.