Steps to Get a Higher Credit Score

There is a reason why consumers receive a three-digit credit score. This number helps a mortgage officer, credit card company or other lending institution determine if you are worthy of a line of credit. People with high credit scores have a history of good credit, and they are more likely to receive approval. People with a low score are high-risk applicants, but they can reverse their ratings and acquire better scores.

Delinquencies

Late payments, skipped payments and completely defaulting on a loan or credit card make it hard for you to receive approval for credit because these habits severely reduce your credit rating. Paying back your debts in a timely manner has a major impact on your credit scores. Because payment history affects scores by 35 percent, it's possible to maintain a fair credit rating with on-time payments alone. However, when you get into a habit of paying late -- or not at all -- your score takes a serious dip and you become a sub prime loan candidate.

Reduce Outstanding Balances

Some people acquire debt, and then think that they can get a high credit score by making minimum payments on time. As mentioned, a good payment history helps your score. However, if you owe several thousand dollars on a credit card, or if you've maxed out several credit accounts, your score will suffer the consequences. Paying down your debt and avoiding new debt is a key to a higher score. As you pay down your balances each month, you will notice an increase in your credit score.

Inquiries

Applying for multiple credit cards can lower your score because credit checks or inquiries count against you. Shopping for the best rate on a mortgage or auto loan within a 30-day period won't damage your rating because you're searching for one loan. However, if you're constantly sending in those pre-approved credit card offers or applying for retail or department store credit, expect your credit rating to take a hit. Slow down with credit applications and only apply for a credit card or loan when necessary.

Credit Reports

Negative information sent to your credit report in error can reduce your credit score and may result in credit rejections. This is why it is important to stay informed and know what lenders are reporting about you. Ordering a free credit report from Annual Credit Report at least once a year helps to keep your credit file accurate and up to date.