9 Easy Steps To Make Your Credit Score Shine

Time for some real talk about what "counts" for adults. Once you’re out of school, your GPA pretty much ceases to matter beyond looking cute on your resumé. Instead, you’re getting measured on your performance the grown-up way: by your credit score.
What’s all this noise about a little three-digit number? Well, for one, having a high credit score — which reveals your debt management skills — can save you a ton of money. Lenders use credit scores to decide if they feel like lending money to you at all, and if so, how much interest to charge you for the privilege. A low (read: bad) credit score could mean you pay thousands more for a car, home or business loan — if the bank agrees to lend to you at all.
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It also takes time to improve your credit score, from several months to several years. That means you should be taking care of it today, not three years from now when you’re ready to start your handcrafted jewelry business, and the bank is all like, “Cute jewelry, but we’re not lending to you.”
We talked to the experts — Minneapolis-based certified financial planner Sophia Bera, Bethy Hardeman of Credit Karma and Rod Griffin of credit reporting agency Experian — to get their advice on how to buff up your score to a new shine.
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1. Get Your Number
The first thing to know about your credit score is that it’s most useful when you keep an eye on how it’s doing over time. Luckily, there are services that do that, like Credit Karma and Credit Sesame.

When you sign up, these services will tell you your approximate credit score, send you alerts when it changes or there’s activity on your credit report (useful for thwarting identity thieves), and generate a chart of how your score has (hopefully) improved over time.

You’re aiming for a credit score of above 700, which puts you into “good” territory. Not there yet? Read on.

2. Get the Deets
Next, you’re going to pull a credit report. “Getting a copy of your credit report is a great place to start, because that can tell you what it is that's bringing your credit down,” Bera says. “Maybe you have an old utility bill or something that you didn't realize was in collections.”

Your credit report will show the details of all the different loans and credit cards you have, credit inquiries, and negative marks ranging from late payments to defaulted loans to bankruptcy. And, once you know what’s going on, you can start fixing it.

Don’t pay money for this report. “You have a right to a free copy of your credit report from each of the three major bureaus once a year, says Credit Karma’s Bethy Hardeman. Do that through AnnualCreditReport.com.

Before we move on, make an appointment with yourself to pull your credit report from a different agency four months from now, and another four months after that. It’s free and useful, so you might as well.
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3. Give It a Quick Scrub
An estimated 10 million Americans have errors that affected their credit, so keep your eyes open for anything fishy on your report. Removing a serious error (such as a falsely reported late payment) from your report is a super-fast way to improve your credit score.

If you find you have a late payment on your record — that’s when you made a payment more than 30 days late — and you have an otherwise clean report, Hardeman suggests writing a “goodwill adjustment letter” to the address of the creditor listed on the report. Keep it short and sweet: Point out your excellent credit history, explain why you paid late, and ask them to make an adjustment to what they report to the agency. Voila! Negative mark gone. (This only works if this late payment was unusual for you, however.)

Also address anything that is in collections, which means you’re so late to pay that it’s fallen into the hands of a collections agency. If you just didn’t know about it, and can afford to pay it off, do so. But if it’s in collections because you’re having trouble paying it down, Bera says you can call up your creditors try to work out a payment plan with them. Take a note of who you talked to and when, and, she counsels, always get things in writing.

4. Automate It
This biggest thing that affects your credit score? Payment history, which accounts for 35% of the generated number. Lenders want to know that you can and will make your payments on time.

“I always recommend automatic payments,” Bera says. “If you have enough money in your checking account, set up as many auto payments as you can so you're never ever late on your payments again.” This includes credit card, mobile, and utility bills. For bills you can’t automatically pay, write them down in your calendar or put them in your online calendar. With an alert. (Maybe two.)
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5. Do Debt Right
You might think paying off all your debt will give you a perfect credit score. (Yay! You win!) But, that’s not entirely true.

“More debt is not necessarily a bad thing for your credit,” Hardeman says. “If you have a mortgage, auto loan, student loans and credit cards, you have a good mix of credit. Although you may feel like you’re drowning in debt, assuming you’re paying your bills on time, creditors will view you as a good credit risk.”

What’s really important is managing debt wisely. As we emphasized above, making on-time payments is key to a good credit score, but it’s also important to not overuse your credit cards — try to utilize no more than 30% of your available credit. That means if you have a $5,000 limit on each of your two credit cards, you shouldn’t have more than $3,000 charged up together on them.

If you’ve run up a very high credit card bill, you should stop using your credit cards and switch to debit until you can get things under control. Then make a plan for paying down the debt (and check out our guide to getting out of debt).

6. Really Bad Credit?
If your credit is so bad you’re having trouble even opening a credit card, you can open a secured credit card to get on the road to recovery.

Secured credit cards are backed by a cash deposit of a few hundred dollars that you provide. You can’t spend more than that, so you won’t find yourself in a credit hole. “They’re typically very easy to get approved for, and they report to the credit bureaus,” Hardeman says. That means that if you use it well, your credit score will start to go up.
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7. Don’t Worry About Pulls
There’s a pervasive myth that having a lot of “pulls” or credit inquiries will tank your score. “The fact is, inquiries have very minimal impact on credit scores,” Griffin says.

There are actually two kinds of inquiries: “hard” and “soft.” Soft inquiries include when you get your own credit report, you’re reviewed by an existing lender, and you get pre-approved credit offers. They only show up in your personal report that you pull and not the one that lenders see. In other words, NBD.

Hard inquires are when a lender or creditor pulls information to decide if you’re creditworthy. “A lot of this type of inquiry can make it seem like you’re desperate for credit — maybe desperate for access to quick cash, in fact,” Hardeman says. “However, creditors also understand the importance of shopping around for the best rates. Inquiries made within a short period of time (a few weeks or so) are counted as one inquiry on your credit report.”

So, as long as you aren’t actually applying for three credit cards at once so you can run them all up, you should be fine.

8. Just Say No to Co-Signing
One way to ruin your credit score is by co-signing a loan. That’s when you agree to cover for someone if they can’t make payments on a loan for their car, home or tuition. The rub is that if they can’t make payments, not only with the lender demand the payments from you, it will tank your credit score. Double whammy.

And, most creditors wouldn’t inform you that your friend or family member isn’t making payments until it’s much too late. “So, you don't even know that there are these late marks on your credit score,” Bera says.

“Honestly, I don't recommend co-signing loans unless you're willing to give that amount to that person,” she says. “Just give it as a gift, with no strings attached.”
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9. Pop the bubbly when you break 750!
If you’ve followed all of the excellent expert advice above, the next ingredient is just time. Most negative marks stay on your report for seven years before falling off. But, there's good news. “The further in the past the negative activity occurred, the less impact it will have on credit scores,” Griffin says. “A late payment that is six and a half years ago will have less impact than a late payment that occurred last month.”

With diligent work, you can get into the 700s territory faster than you might think. “If you declared bankruptcy or foreclosed on a home, your credit will suffer significantly,” Hardeman says. “But if your credit has just suffered due to neglect or irresponsibility, you could build it back up to a respectable rating in 12 to 24 months.”

When you get above 750, you officially have excellent credit, and lenders will be falling all over themselves to give you low interest rates. So give yourself a celebratory coup de champagne. (Just make sure to pay off that bill at the end of the month.)
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