5 Easy Steps To Improve Your Credit Score

Question: What are some ideas on how to boost my credit score, Your credit score plays a leading role in your life. Bruce McClary, vice president of communications for the National Foundation for Credit Counseling. A good credit score goes beyond the ability to get a loan at the best terms — it can also save you money on things like utilities, rent or a cell phone plan. Your credit score is calculated using a mix of data, including your payment history, how much credit you have and length of credit history.

The goal should be to have a score above 760, said McClary. A low credit score doesn't have to haunt you forever, but the process of improving your score is a marathon, not a sprint. Here are steps experts laid out to help improve your score and get back on the right borrowing track. You can check your credit report for free once a year from each of the three main credit reporting agencies, TransUnion, Equifax and Experian.

But your score won't be included on these free reports — you'll usually have to pay to see it. If you do purchase your score, it usually comes with a list of risk factors, explained Rod Griffin, director of public education for Experian. This will give you a good starting point on what areas you need to improve.

While it's not exactly the same number that lenders see, it should give you a pretty good idea of where you stand. But not everyone will provide the risk factors, according to Griffin. Your payment history is the biggest factor in determining your credit score. Lenders don't want to give money to someone who has a history of missed payments. Paying a bill more than 30 days late can drag down your score.

If you went through a period of time where money was tight and you were late with some payments, it's time to right the ship. Curb your spending and start a track record of paying your bills on time. Here's the golden rule: Only charge what you can afford to pay every month in full. Keeping your balances low will help boost your credit score.

Aim to keep your debt utilization — which is amount of available credit you actually use — as low as possible. If you are carrying a balance on any of your credit cards, create a plan to get them paid off as soon as possible. There's no need to have a wallet full of credit cards, but having one or two that you use responsibly will help your score. But if you don't have a credit card, he recommended opening an account and making a small purchase each month and paying it off. Good credit scores don't just happen overnight.

For instance, the positive effects of opening and making on-time payments on a credit card could take a few months to show in on your score, according to Griffin. Correction: An earlier version of this story stated that paying a bill a few days late could hurt your credit score. A payment would usually need to be more than 30 days late before being reported to the credit bureaus.

“Yes, we’ll give you a free credit report if only you’ll buy a side of beef and a set of truck tires. Well, okay, not so blatant but you get the idea. That “free” credit report is not so free. Red flags should go off if you’re asked for a credit card number.

Related: Does checking your credit score hurt your credit, A “free” credit report is a bright and shiny thing to attract your attention. Some providers require you to sign up for credit monitoring in exchange for the credit report. Others want you to provide contact information so that their partners can send you offers or advertising. Under federal rules, you can get one free credit report from the three leading credit reporting agencies (CRAs) - Equifax, Experian and TransUnion — each year. You can get three all together, or you can space out your requests over time.

The reason to look at credit reports is to make sure they’re accurate. Look for outdated negative items. This might be information over seven years old, 10 years for Chapter 7 bankruptcies, and possibly longer for judgments. Check the administrative information. Is the Social Security number right, How about addresses and dates,

Are any items for credit events that don’t involve you, If you find a problem, contact the credit reporting agency immediately. Can we trust the free credit reports found online, Free reports can help us find incorrect and outdated information. They can also help us spot identity fraud. Both credit reports and credit scores come from your credit history.

Think of credit reports as a big pile of receipts. Credit scores organize the information found in credit reports and tell us what us what it means. In the same way that there are different credit report providers, there are also different credit score developers. Mortgage lenders draw FICO credit scores based on credit reports from Equifax, Experian and TransUnion.