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Four Simple Steps to Boost Your Credit Score

Keeping your credit score high is a vital part of good financial health. Whether you apply for a credit card, mortgage, or personal loan, your credit score is a key factor in determining your chances for success. A credit score is compiled from years of past credit behavior, so there is no way to repair it overnight. However, there are some best practices for improving your credit score over the long-term.

1. Stay current on payments.

Missing just one payment, or even making a late payment, can significantly lower a credit score. According to Fair Isaac Corporation (FICO), the company that maintains the most popular credit report, a single late payment can cause a good credit score to drop as much as 100 points. (The maximum FICO credit score is 850.)

The impact of late or missed payments on a credit score does diminish over time, however, all credit information remains on a credit report for seven years.

Tip: To avoid missing or late payments, sign up for automated payments to help with monthly bills. Some banks and credit card companies even send out payment reminders via e-mail or text message.

2. Shrink your debt.

Another smart step to repair your credit score: pay down your outstanding credit card balances. It’s important to keep your outstanding balances less than 30 percent of the total credit limit, according to

Tip: Simply shuffling debt from one credit card to another won't work. Neither will closing unused credit cards or opening new accounts that you don't need to try to raise your overall credit limit. Instead, your best bet is to keep credit card turnover to a minimum and build up a steady track record of on-time payments.

3. Ensure the accuracy of your credit report.

According to a recent Federal Trade Commission report, one in five Americans have inaccuracies in their credit reports. The study found that 5 percent of consumers had errors on their reports that were signficantly affecting their ability to get loans. These mistakes can range from a creditor never reporting that an old debt was paid off to an unknown charge made by a hacker.

That’s why you must be extra vigilant when reviewing your credit report. To check your own credit report, go to and get a free copy from one of the three main credit ratings agencies (Experian, Equifax, TransUnion). If you do find errors, immediately contact the agency that recorded the mistake. The respective bureau will have 30 days to investigate. If the bureau acts in your favor, your credit score should increase after the correction is made.

4. Be strategic when applying for credit.

A flurry of credit report activity over a short timespan can end up lowering your credit score. Though many credit bureaus provide a 15- to 45-day grace period for rate shopping, if too many of these searches happen all at once, they could still negatively impact your score, according to Credit Karma, a free credit and financial management site.

Does this mean you shouldn’t do your due diligence when researching loans? Of course not. But you should exercise caution when seeking out financing for more than one financed purchase. If you’ve just secured a new mortgage, for instance, Credit Karma suggests waiting a few months before seeking out an auto loan for a new car. 

"Attempting to secure too much credit at one time may give lenders the impression that you're desperate for cash or unprepared to handle your debts responsibly," warns Credit Karma. “If you go about the process responsibly, you can achieve the benefits of comparison shopping without causing undue damage to your credit profile.”

Are you also looking for tips on how to make the most of your savings dollars? Read advice from a local financial advisor in Smart Savings Strategies for Every Age.