Improving your credit score

Monitor your payment history

Your payment history is the most important factor for your credit score.

To improve your payment history:

Get electronic alerts from your financial institution

Your financial institution may send you an electronic alert when the credit available on your credit card falls below a certain amount.

These alerts may help you manage your day-to-day finances, such as your credit payments.

Learn more about these electronic alerts.

Use credit wisely

Don’t go over your credit limit. If you have a credit card with a $5,000 limit, try not to go over that limit. Borrowing more than the authorized limit on a credit card can lower your credit score.

Try to use less than 35% of your available credit. It’s better to have a higher credit limit and use less of it each month.

For example:

If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.

To figure out the best way to use your available credit, calculate your credit usage rate. You can do this by adding up the credit limits for all your credit products.

This includes:

For example, if you have a credit card with a $5,000 limit and a line of credit with a $10,000 limit, your available credit is $15,000.

Once you know how much credit you have available, calculate how much you’re using. Try to use less than 35% of your available credit.

For example, if your available credit is $15,000, try not to borrow more than $5,250 at a time, which is 35% of $15,000.

Increase the length of your credit history

The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.

If you transfer an older account to a new account, the new account is considered new credit.

For example, some credit card offers come with a low introductory interest rate for balance transfers. This means you can transfer your current balance to this new product. The new product is considered new credit.

Consider keeping an older account open even if you don't need it. Use it from time to time to keep it active. Make sure there is no fee if the account is open but you don't use it. Check your credit agreement to find out if there’s a fee.

Limit your number of credit applications or credit checks

It’s normal and expected that you'll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, it’s recorded as an inquiry. Inquiries are also known as credit checks.

If there are too many credit checks in your credit report, lenders may think that you’re:

How to control the number of credit checks

To control the number of credit checks in your report:

"Hard hits" versus "soft hits"

"Hard hits" are credit checks that appear in your credit report and count toward your credit score. Anyone who views your credit report will see these inquiries.

Examples of hard hits include:

"Soft hits" are credit checks that appear in your credit report but only you can see them. These credit checks don't affect your credit score in any way.

Examples of soft hits include:

Use different types of credit

Your score may be lower if you only have one type of credit product, such as a credit card.

It's better to have a mix of different types of credit, such as:

A mix of credit products may improve your credit score. Make sure you can pay back any money you borrow. Otherwise, you could end up hurting your score by taking on too much debt.

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