When you receive your reports, review them carefully for errors. Common errors include discrepancies in your personal information, incorrect registrations, expired negative registrations, and accounts that don’t belong to you, which could signal identity theft. Report any inaccuracies to the credit bureaus.
2. Pay your bills in full and on time
Lenders report your payment history to the credit bureaus, which use this information to help determine your credit score. When you pay your bills in full and on time, that’s strong proof of creditworthiness, so make full and timely payments a priority.
That said, many people experience times when they need to defer payment for a while. If you can’t pay an invoice in full, make at least the Minimum Payment amount before the due date. Use your bank’s mobile app or automatic payments to help you meet your deadlines.
3. Minimize the “hard knocks” on your account
Any inquiry about your credit report is called a “hit”, but not all hits have a negative impact. When you use Capital One’s Quick Check tool to see—before you apply – which of their credit cards you will be approved for, it results in a soft hit, which does not impact your credit score.
When you apply for a credit card or a loan, however, the lender checks your report, and that’s a sign to the credit bureaus that you’re looking for credit. This type of survey is considered a blow, which could cause your score to drop temporarily. A cluster of hard knocks may indicate a deeper financial problem.
If you are looking for a new credit card or other forms of credit, research the product thoroughly before applying. If you’re looking for a new credit card, using Capital One’s Quick Check will tell you with 100% certainty which Capital One cards you’d be approved for, with no commitment to apply and no impact on your credit score.
4. Be aware of your credit utilization rate
Having too much debt can hurt your mental well-being, and a high debt-to-credit ratio can also negatively impact your credit score. But how much debt is too much? The answer lies in your credit utilization ratio, which is simply the amount of debt you have compared to the amount of credit you have. The lower your debt ratio the better, but up to 30% (e.g. $3,000 debt to $10,000 credit) is considered acceptable by most credit reporting agencies and lenders.
5. Use different types of credit
You can make a good impression with the credit bureaus by successfully holding and managing several types of credit. In addition to credit cards, it can be car or personal loans, lines of credit, a mortgage or a student loan. Again, it’s best to make payments in full and on time.