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The Proper Way to Increase Your Credit Score


Your credit score plays a significant role in your financial life. It affects everything from your ability to borrow money to securing favorable interest rates on loans, credit cards, and mortgages. A good credit score helps you get the best deals and pay less interest. However, if your credit score is low, it can impact your ability to get approved for credit or borrow money, and you may end up with higher interest rates and less favorable terms.

Fortunately, there are ways to increase your credit score the right way. Here are some tips for improving your credit score.


Check Your Credit Reports

The first step to increasing your credit score is to check your credit reports. Your credit score is based on the information in your credit reports, and any errors or inaccuracies can negatively affect your credit score. You are entitled to one free credit report annually from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Review your reports carefully, and dispute any errors or inaccuracies.


Make Payments on Time

One of the most critical factors that affect your credit score is your payment history. Late payments can significantly lower your credit score and have long-term effects on your creditworthiness. To build a good credit history, it is critical to make payments on time. If you have missed payments in the past, it is never too late to start making payments on time. Set up automatic payments or reminders to help you make payments before the due dates.

Lower Your Credit Utilization Ratio

Your credit utilization ratio is the amount of debt you owe compared to your credit limit. A high credit utilization ratio can damage your credit score. Ideally, your credit utilization ratio should be below 30% of your credit limit. If you have high balances on your credit cards, consider paying them off or reducing your balances as much as possible. This can help you lower your credit utilization ratio and improve your credit score.

Don’t Close Old Credit Accounts

While it may be tempting to close old credit accounts, it can actually lower your credit score. Closing your old credit accounts reduces your available credit and can increase your credit utilization ratio. Keep your old accounts open, even if you don’t use them anymore. This can help you maintain a long credit history, which is a crucial factor that affects your credit score.

Limit New Credit Applications

When you apply for new credit, it can lower your credit score by a few points. Multiple applications in a short period can signal that you are taking on too much debt and may be a risky borrower. Limit new credit applications, and only apply for new credit when necessary. Instead, focus on improving your credit score by paying off existing debts and reducing your credit utilization ratio.

Diversify Your Credit Mix

Having different types of credit accounts such as credit cards, auto loans, and mortgages can help you diversify your credit mix. This shows your ability to manage different types of credit accounts and can improve your credit score. However, you should only take on additional debt if you can afford it. Don’t take on additional debt just to improve your credit score.

Practice Good Credit Habits

Improving your credit score requires discipline and good credit habits. Pay your bills on time, keep your credit utilization ratio low, and don’t take on unnecessary debt. Budget wisely and live within your means. Practice these good credit habits continuously, and your credit score will improve over time.


Improving your credit score takes time and effort, but it’s worth it in the long run. A higher credit score can help you get better interest rates, save you money on loans and credit cards, and even help you get approved for jobs and apartments. By following the above tips consistently, you can build a good credit history and improve your credit score. Remember, your credit score is a reflection of your creditworthiness, so make sure you take the necessary steps to maintain a good credit score. Let OUR Credit Union help you review your credit report free of charge to learn where you can make improvements.

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