What Improves Credit Scores?

Improving your credit score can save you money by helping you obtain a lower interest rate on a loan. It also can help you to obtain a line of credit, and it may help you get the job you want. Improving your credit score can be the result of developing good credit habits you develop over time, according to the Experian website.

Manage Your Credit

When you demonstrate the ability to manage your credit on a consistent basis, your credit score improves, according to Liz Weston, writing on the MSN Money website. She notes that keeping your credit balances between 10 to 30 percent of your credit limit -- which is called the credit utilization ratio -- helps your credit score and makes you attractive to prospective lenders. Avoid maxing out credit cards (using 100 percent of available credit), but do not stop using your cards. Going to one extreme or the other will damage your score.

Pay on Time

How you handle your credit debt is as important as how much credit you have when it comes to maintaining a good credit score. To improve your credit score, you need to pay your credit bills on time and pay at least the minimum payment each month, according to the MyFICO website. A payment that is two or three days late can have a significant negative effect on your personal credit score.

Keep Accounts Open

Consumers may assume that closing old credit accounts is a way to increase their credit scores. The reality is that closing your old credit accounts stops the positive effect of a long-standing credit card account and can damage your credit score, according to Pat Curry, writing for the Bankrate website. Closing an account also decreases your overall available credit, which, in turn, increases your credit utlization ratio and damages your credit score. Not only should you leave your old accounts open, but you should use them from time to time to keep the history active. Only use the older cards for amounts that you can pay off in 30 days to prevent carrying a balance.

Consolidation

When credit debt gets to be a problem, some consumers may turn to debt consolidation to help their situation. Moving debt around is not going to help your credit score, but paying down existing accounts will, according to the Experian website. It helps your credit score for you to keep your existing accounts intact and pay them down rather than moving your debt from credit cards to a loan or consolidation program.