What's the Simplest Thing I Can Do to Boost My Credit Score?

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By Christine DiGangi

If you pay your bills on time, you can improve your credit scores -- it can be that simple.

Now, for someone who has irregular income or is dealing with unemployment, this can be tricky, but someone with regular paychecks should be able to pay the bills on time. Payment history has a big impact on your credit scores, so if you're looking for a place to start when improving your numbers, it's a good one.

Get Organized

When it comes to the absolutely teeniest, tiniest thing you can do to improve your credit scores, you need to know where you currently stand. While organizing your financial information may not have a direct impact on your credit scores (sorry, scoring models don't have a category for effort), it makes everything easier.

In order to pay balances on time, you have to know when they're due. Make sure you haven't lost track of any accounts or bills: Think back to the holiday shopping season and if you opened any store accounts, and don't forget to check the mail for medical bills after a visit to the doctor. Figure out a mail sorting system. File things. Use a calendar to mark due dates. It's not the most enjoyable activity, but it's an important one.

Use Tools

There are dozens of free tools available to make personal finance easier. On the organization front, automatic bill payments are wonderful. You can set them up for most things, whether that's credit cards, student loans or utilities. Even if you're paying an individual -- like a landlord -- you can often arrange recurring online transfers with your bank.

You can often customize how much you pay, whether it's the statement balance or a set amount, but you should make sure you have enough money to cover the payment. If a large, unexpected purchase, like a car repair or emergency healthcare, means you put more on a credit card during a billing cycle, make sure to make necessary adjustments to prevent overdrawing your connected account.

This can be especially helpful if you're trying to pay down credit card debt and the payment amount stays the same.

"Put your credit cards on autopay and stop using them," said Gerri Detweiler, director of consumer education for Credit.com. "You know each monthly payment will get paid on time, and there won't be any late payments, and your debt will continue to decrease, which helps your utilization."

Look at that: Two steps toward better credit scores in one action. Utilization (how much you use of your available credit) is the second most-important factor in credit scoring, after payment history.

You can see the factors that affect your credit scores using free tools like the Credit Report Card, which breaks down the five components of a credit score and how well you perform in each of them. You'll get a letter grade from A to F in payment history, credit utilization, credit age, account mix and inquiries.

Make Payments

Getting organized is great, but you have to follow through. If you set up automatic payments, make sure you don't spend the money in your checking account on other things. If you have arranged a manual payment, by dropping off cash or sending a check, do it early. Paying a day late may not seem like a big deal, but late is late, and late is bad.

If you're in a situation where money isn't coming in on a regular schedule, make sure you save part of the paycheck when you get it. The importance of an emergency fund can't be stressed enough, because one thing you can predict about the future is that you still have bills. You need to prepare for that.

Sit Tight

As long as you're making payments on time and living within your means, your scores should improve. In other words, don't do anything to jeopardize those good habits.

"Only open new credit when you need it," said Anthony Sprauve, senior consumer credit specialist at credit scoring company FICO. "Don't open new credit because you're buying something at a store and you're going to get 10% off a new dress or a suit." Not only will inquiries ding your credit scores, opening a new credit account may tempt you to spend money you shouldn't.

Speaking of unnecessary spending: Rein it in.

"The thing that seems extremely obvious is to stop spending on things you don't need," said Rod Griffin, director of public education for the credit bureau Experian. "If I see something and I really really want it, I walk away from the store and wait 24 hours, and quite often I never go back." The same thing applies to online shopping. Close the window and come back later if you decide you need it. It sounds like a no-brainer, but small actions like this help over time, Griffin said.

If you take anything away from these tips for improving your credit, let it be this: "Paying every bill on time every time, no exception," is crucial, Sprauve said. "Payment history is the most important factor."

Christine DiGangi covers personal finance for Credit.com. Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record. More by Christine DiGangi


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k4jlp

Fire all of Congress for allowing our jobs to be sent overseas and allowing everything we need to be placed on the Commodity Market so profits can be scammed off the top WITHOUT EVER EVEN TAKING DELIVERY OF THE PRODUCT. They are also fired for allowing Corporations to form monopolies in health care, why should an asprin cost 7 bucks in a hospital? All the while our wages (if we have any) stay STAGNANT. Got to go now and fall back in line with the rest of the SHEEP....BAH...

January 14 2014 at 6:57 AM Report abuse +6 rate up rate down Reply
endlessdrip

When I was a kid I saw credit cards come in the mail to my father. He took the cards and cut them in half. My boss who owned a major bank in Chicago once told me, never get into the banks.
Banks will loan you just enough money to hang yourself with. Once your approved they don't care if you max out your limit. You'll find out soon enough just how horrible banks will become if you don't keep your payments current. Oh, and those little banks in every town that know you by name when you walk in. They are the worst! They'll cut you off at your knees if you default on a loan. Do yourself a favor, pay cash for what you need. Treat every nickel like it was your last.
Leave the fancy cars and big houses and boats to the Jones's next door. Live below your means and put at least 10% of each paycheck in your savings account. Skip vacations and have money left to pay your bills. Independence is worth all the money in the world.

January 13 2014 at 9:09 PM Report abuse rate up rate down Reply
k4jlp

Do you really think a debt you paid that was listed as "negative" belongs on your report FOR 7 YEARS? I think NOT. It should go away one year after you pay it. How much time should we be PUNISHED? How many more stupid rules like the one "to many inquiries" can they come up with to keep our scores down. It's my damn credit and I have the right to shop around as much as I see fit for the best rates.

January 13 2014 at 8:06 PM Report abuse +1 rate up rate down Reply
welcome timothy

I never missed a payment, I have about $100,00 worht of credit yet my credit score is not as good as it should be for a couple of reasons: 10 (2004) years ago I closed a credit card account, which in hind sight was a big mistake because I carried that card since 1991, but as of 1/14 that credit is no longer valid so my next credit card I took out was in 2003. You see credit bureaus only acknowledge credit of a closed account for 10 years. I doesn\'t matter that I have had a credit history since 1986, what matters is what credit is still opened or at least closed within 10 years My credit history went from 23 years to 11 years in just one day. Also I have student loans which only hurt your score and do nothing to help it. You see credit bureaus do not consider student loan debt a credit even though I have been paying 1,000/month for the past 20 years, on time it means nothing to the credit bureaus. It comes down to this if you are rich enough never to have to use credit means you have the best shot of having a good credit score.

January 13 2014 at 2:48 PM Report abuse +1 rate up rate down Reply
1 reply to welcome timothy's comment
Marc

Being rich has nothing to do with having good credit. I make less than $50k and have excellect credit.

January 13 2014 at 10:34 PM Report abuse +1 rate up rate down Reply