How To Improve Credit Score Play By The Rules

Many people wonder how to improve credit score.  There are many reasons why they might care about what is on their report.  For one thing, access to credit depends on what your score is.  You may not be able to get credit at all if your score is too low.  So, here’s how to improve credit score.
Many people advising you on how to improve credit score will have gimmicks and tricks to make short term jumps.  Unfortunately, these don’t tend to work.  The credit agencies aren’t stupid.  They close loopholes quickly.  But the advice sticks around long after the formulas change.
The best advice on how to improve credit score is to play by the rules.
That means using credit responsibly.  The foremost advice I can give you is to take out only the loans you need and can afford.  Then, pay them on time every month.

Some credit, like a home mortgage, is absolutely necessary for the functioning of life.  With renting as the only viable alternative, your home is an important asset in your portfolio.  The best advice for this kind of credit is to not buy more than you can afford to pay back and then make your payments on time each month.
Other credit, called revolving credit, involves mostly credit card debt.  The advice for credit card debt is more complicated.  For instance, you don’t want to max out your cards.  At the same time, you don’t want to have multiple cards.  You want to appear like you can handle the credit card debt that you have.
High outstanding debt on credit cards can lower your credit score.  So, you should keep balances low.  At the same time, you don’t want to have a lot of unused credit because that too makes you a risk.  If you have $1000 in debt but $20,000 in available credit, the credit reporting companies recognize that you could go on a spree and suddenly end up over your head in debt.
Another trick some suggest for how to improve credit score is to move debt balances from card to card always chasing low teaser rates.  The credit reporting companies have gotten wise to this trick.  FICO says that paying off debt rather than moving it around is the effective way to improve your credit score.
You shouldn’t close credit cards as a short term strategy for how to improve credit score.  While over the long run, having fewer cards can help the score, if you are looking for a short term boost, this can actually hurt you.

Similarly, you shouldn’t open a bunch of cards to make it look like your credit utilization ratio is smaller.  You also shouldn’t open a bunch of accounts when your credit is new, which happens to a lot of young people who are bombarded with credit offers at their colleges.
If you want to know how to improve credit score, you should know that it is a long term process that mostly involves managing your credit responsibly, paying your bills on time, and not taking on more debt than you can afford.  There are no quick tricks.  There’s just responsibility.
That’s how to improve credit score.