Need to boost your credit score?
Unfortunately, a credit score isn't like a race car, where you can rev the engine and almost instantly feel the result.
Credit scores are more like your driving record: They take into account years of past behavior, not just your present actions.
To boost your score, "pay down your balances, and keep those balances low," says Pamela Banks, senior policy counsel for Consumers Union.
Eliminate
"A good way to improve your score is to eliminate nuisance balances," says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.
The reason this strategy can help your score: One of the items your score considers is just how many of your cards have balances, says Ulzheimer.
Leave (good) old debt on your report
Some people erroneously believe that old debt on their credit report is bad, says Ulzheimer. The minute they get their home or car paid off, they're on the phone trying to get it removed from their credit report, he says.
Negative items are bad for your score, and most of them will disappear from your report after seven years. However, "arguing to get old accounts off your credit report just because they're paid is a bad idea," he says.
Good debt -- debt that you've handled well and paid as agreed -- is good for your credit. The longer your history of good debt is, the better it is for your score.
Use your calendar
If you're shopping for a home, car or student loan, it pays to do your rate shopping within a short time span.
Every time you apply for credit, it can cause a small dip in your score that lasts a year. That's because if someone is making multiple applications for credit, it usually means he or she wants to use more credit.
However, with three kinds of loans -- mortgage, auto and more recently, student loans -- scoring formulas allow for the fact that you'll make multiple applications but take out only one loan.
If you're shopping for a home, car or student loan, it pays to do your rate shopping within a short time span.
Every time you apply for credit, it can cause a small dip in your score that lasts a year. That's because if someone is making multiple applications for credit, it usually means he or she wants to use more credit.
However, with three kinds of loans -- mortgage, auto and more recently, student loans -- scoring formulas allow for the fact that you'll make multiple applications but take out only one loan.
Always pay bills on time
If you're planning a big purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash.
While you're juggling bills, you don't want to start sending bills late. Even if you're sitting on a pile of savings, a drop in your score could scuttle that dream deal.
One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.