How to Improve a Credit Score With a Revolving Credit Balance

Your credit score can affect many aspects of your life, including employment, loan interest rates and your ability to buy a house. Knowing a few ways to improve your credit score can save you thousands of dollars a year in these areas. The balances you hold in your revolving accounts, such as credit cards, can have a major effect. According to the Federal Citizen Information Center, the most effective way to improve your credit score in this area is to pay down your revolving credit.

Instructions

Preparation

1

Visit Annual Credit Report, a U.S. government site, to receive your credit report. While this is not your credit score, you will be able to see any inaccuracies or false information that would affect your credit score.

2

Visit MyFico to obtain your FICO (Fair Isaac Corporation) credit score. According to the Federal Citizen Information Center, FICO is the most commonly used scoring system.

3

Review your credit score to determine where on the FICO range of 300 to 850 you fall. Also, review your credit report for any inaccuracies and to make sure it contains no unauthorized accounts, which could indicate identity theft.

Your FICO Score

4

Pay all of your accounts on time, or catch up as soon as possible. About 35 percent of your FICO score relates to payment history. Negative items such as late payments or bankruptcies can lower your score. When you have a revolving balance, it is especially important to current with your accounts. Each credit card may have a different due date, and you need to keep track so you don't miss a payment.

5

Limit the amount of money you owe. Roughly 30 percent of your FICO score pertains to how many accounts you have open, how many of those have balances, and how much credit you have available. According to a MSN Money article, it is important to keep your revolving balances at or below 30 percent of your limit.

6

Keep your accounts open. About 15 percent of your FICO score has to do with the length of your credit history. If you have old credit card accounts that are not used, do not close them as it will affect this area of your credit score.

7

Limit your new credit inquires, or limit the window of time in which you inquire. Ten percent of your FICO score has to do with new credit inquires and the length of time between inquires. If you are shopping for a good rate on a new loan, try to limit the window in which you shop for rates. This would also include applying for new revolving accounts, such as credit cards.

8

Mix your credit types to maximize your score. Several minor factors make up the last 10 percent of your FICO score, including your account mix. It's good to have a mix of accounts such as revolving accounts like credit cards, installment loans like auto loans, and personal lines of credit.