Having an excellent credit score makes many things in life much easier. From buying a house or car to getting a credit card or business loan, having a good credit score is essential. Even utility companies and cell phone service providers take credit scores into consideration when you’re establishing a new account or moving services.

Your credit score isn’t a number you’re stuck with. If you don’t like your current score, taking specific action, especially with accounts included in your credit report will help you achieve a much better credit score. To transform your credit, you have to take control of your credit, get rid of your bad money habits, and start making better financial decisions.

Get caught up on past due payments.

If you’re not behind on any payments, congratulations, you already have a headstart toward the best credit of your life. On the other hand, if you’ve fallen behind on a payment or two or you have debts in collections, make taking care of these priority. You can’t have a great credit score if you have past due accounts on your credit report.

To figure out whether you have any past due accounts, pull a copy of your credit report (you can get a free credit report from AnnualCreditReport.com). Then make a plan to catch up on these accounts. The sooner you can get caught up, the sooner your credit will start improving.

Pay everything on time.

Payment history is the most important factor that influences your credit score – it’s 35% of your credit score. Make it a goal to pay all your bills on time always. The more on time payments you have on your credit report, the better your credit will be. Credit cards and loans are two accounts that typically report payment history to the credit bureaus. These are accounts you definitely want to pay on time no matter what.

Don’t think you can neglect bills that aren’t regularly reported to the credit bureaus, like cell phone services or utility payments. If you get too far behind on these, they too will be reported to the credit bureaus, but more likely in the form a debt collection. And debt collections are far worse for your credit than late payments on other bills.

Live within – and even below – your means.

Many of your day-to-day financial moves have no direct impact on your credit score. Buying groceries, fueling up your vehicle, and paying your utility bills won’t make your credit score better or worse. However, how you manage your money can have an influence on whether you’re able to pay your bills and the amount of debt you have. Your credit score can benefit from living beneath your means, at least indirectly.

When you spend less than your income, you can comfortably afford to pay your bills and make your payments on time each month. You don’t have to turn to credit cards or loans to pay your bills and can keep your debt at a level that helps your credit score.

Stop using your credit cards without a plan to pay off the balance.

Because credit card issuers only require a small minimum payment toward credit card balances, many people overuse their credit cards and take their time paying back what they’ve charged. While it’s convenient to repay a credit card balance over time, it’s not the best move for your credit, especially if you’re carrying high balances.

Ideally, you should pay your credit card balance in full each month. As an exception, you might pay off your credit card balance over time if you’re taking advantage of a 0% interest rate promotion on purchases or balance transfers.

Be more aggressive about paying off your credit cards.

Reducing your credit card balances will help your credit score tremendously. That’s because the second-biggest factor affecting your credit score is the amount of debt you’re carrying. You’ll see an increase your credit score as you bring your credit card balances below 30% of their credit limits. That means carrying a $1,500 balance or less on a credit card with a $5,000 credit limit.

Can’t decide which credit card to pay off first? Pay the one with the highest interest rate if you’re interested in saving money. Pay the lowest balance if you want to knock out a few balances quickly. Or, if you have a credit card that you just want to get rid of, start with that one.

Check your credit often.

Monitoring your credit will keep you aware of the updates to your credit report and your credit score. You’ll be able to see how your credit score improves as you catch up on past due accounts and reduce your credit card and loan balances. Monitoring your credit will also allow you to spot and deal with credit report errors quickly and catch instances of credit card fraud or identity theft before it gets out of control.

Thankfully, there are numerous ways you can monitor your credit for absolutely free. Credit Karma, Credit Sesame, Quizzle, and Discover Scorecard are just a few of the most popular free credit monitoring tools. Each year, you can also get one free copy of each of your credit reports from each of the three major bureaus (Equifax, Experian, and TransUnion) by going to AnnualCreditReport.com.

You’ll know whether a credit report or score is truly free based on whether you have to enter a credit card number. Any service that asks you for a credit card number for a free credit report or score is actually signing you up for a trial subscription to a credit monitoring service. If you don’t cancel the free trial before the trial period is up, you’ll end up being charged regularly for the credit monitoring services.

Stop taking out cash advances on your credit card.

Of all the transactions you can make on your credit card, cash advances have to be the worst. It may seem like a convenient way to use your credit card to take out cash, but credit card cash advances aren’t like an ATM withdrawal with your debit card.

Your credit card issuer will charge you a cash advance fee that’s either a minimum amount, like $5 or a percentage of the amount of cash withdrawn. The interest rate on cash advances is much higher than that for purchases and balance transfers. And you probably won’t get a grace period to pay off the cash advance and avoid paying any interest – finance charges start adding up right away.

If you’re taking out cash advances to cover necessary expenses, then you have a bigger financial problem that will only get worse by relying on your credit card. Work on living within your means, cutting out expenses or increasing your income, so you don’t have to rely on credit card cash advances.

Don’t let credit report errors stick around.

Don’t take for granted that everything in your credit report is accurate. One report from the Federal Trade Commission estimates that 25% of consumer credit reports contain errors serious enough to affect their credit scores.

When you review your credit report, look closely for any accounts that are not reported correctly. Examples of errors include accounts that don’t belong to you, late payments that you actually made on time, and incorrect credit limits.

Your legal right to an accurate credit report allows you to dispute any errors on your credit report. You can dispute these errors directly with the credit bureaus – online and in writing are two of the best ways. If the credit bureau does not correct the error, you then have the right to dispute the error directly with the company who reported the account to the credit bureau.

Gain experience with a new type of credit.

Your credit score is better when you demonstrate that you can successfully handle different types of credit and loan accounts – 10% of your credit score is based on your mix of credit. If you’ve typically only carried retail credit cards, for example, getting a major credit card will help improve your credit score. Similarly, if you’ve only had credit cards, an installment loan will also help your credit score.

Make sure you’re borrowing money for a purpose and that you can afford to repay any credit card balances you create or loans you borrow. Otherwise, you risk over-borrowing and damaging your credit with late payments.

Stop applying for credit cards just because.

Whenever you make an application that requires a credit check, like an application for a credit card for example, an inquiry is made into your credit. All the inquiries made into your credit within the past 12 months are included in your credit score and too many of them will hurt your credit score. Not only that, a portion of your credit score considers the average age of your credit history. Opening up new accounts lowers your average credit age and impacts your credit score.

Credit card issuers may tempt you with pre-approved offers for credit cards with better rewards or promotional interest rates. Don’t apply for these credit cards just because the credit card issuer invited you to. Instead, make sure that each credit card in your wallet serves a specific purpose, especially if you’re looking to boost your credit score.

Be ok with waiting.

The ease of credit allows us to get what we want immediately, without much upfront sacrifice. Unfortunately, we become so used to having what we want right away that we don’t think about the ongoing future cost or the consequences.

Practice patience in your financial decisions, especially major ones. Compare credit cards so you choose the best one. Shop around for the best loan terms. Improve your credit before applying for a loan so you can qualify for a lower interest rate. Save up for purchases instead of financing them. Take the time to repair your credit rather looking for a quick fix. The more time you take to make and prepare for major financial decisions, the better your credit will be.

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