How to Raise Your Credit Score

The largest single factor in your credit score is on-time bill payment.

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(SALEM, Ore.) - How can consumers boost their credit scores? If you want to increase the three-digit number that shows up on your Experian, Equifax or TransUnion report, there are a few things you can do that will almost certainly deliver favorable results within a mere six month period. Here's a quick look at realistic steps people take to improve their scores.

Pay Balances Down

Use a bonus from work, a tax refund check, or even proceeds from a garage sale to pay card balances down. Everything little bit helps, and it all eliminates high-interest debt.

Windfalls, like the ones mentioned above, aren’t the only options available to you. There are ways to reduce expenses as well. Consider refinancing private student loans, your home loan, and other types of debt repayments to free up the needed cash.

Refinancing can be the perfect way to trade high-interest debt for a lower interest rate more reflective of your financial standing. It’s common for recent college graduates to be inundated with monthly payment obligations for all those loans they took out while earning their degrees.

Chances are the interest has been capitalizing into the loans for quite a while, and the monthly payments may be more than some are prepared to make.

If you have high balances on cards and revolving lines of credit, pay them down as much as possible. In fact, the amount of your potential credit that you use is one of the key determining factors in your score. If, for example, you have three cards with a total maximum credit limit of $5,000, try to get the total outstanding balance down to $1,000 or less.

There's no hard-and-fast rule on this guideline because the different bureaus handle it in their own ways. A general rule of thumb is to not let your card balances go above the 20% threshold of available credit. This will keep your usage factor at a favorable level and could show an improvement to your credit score at all three bureaus.

Have Different Types

The best mix is to have at least one non-secured bank credit card, one retail credit card, a personal loan, an auto loan, and a home loan. If you don't own a home, there are other options. Try to take out a small personal loan at your bank or credit union, but with the full intention of paying back as quickly as possible.

It is possible you will take a very small hit on your score when you apply for a new line of credit. However, that penalty will be more than offset by the bump you get from having a more varied array of credit.

Pay Bills on Time

They may not report an atypical late payment if you give them advance notice. Though this is by far the last lever you want to pull. If you have any available options, even borrowing money from family, you will want to pursue them.

Source: Salem-News.com Special Features Dept.