Credit building checklist: 6 guidelines for a better credit score

Want to see a big improvement in your credit score? Most experts agree that you should follow these guidelines.

1. Check your credit report at least once a year so you can correct any errors that may be hurting your score. The Federal Trade Commission has excellent instructions for how to obtain a free copy of your credit reports once a year, and explanations for how best to correct any errors you may find.

2. Pay all your bills on time. Do yourself and your credit score a favor: set up autopay with your bank or credit card company. You'll cross one item off your monthly to do list forever, and eliminate late payments and late fees for good.

3. Keep your impeccably managed accounts over a long period of time. The longer an account remains in good standing, the better for your credit score, so it can be a good idea to keep an old credit card account open and in good standing, even if you rarely ever use it. Read more: Why is your credit score negatively impacted when you pay off an cancel a credit card?

4. Avoid unnecessary hard inquiries on your credit report. If you apply for credit, such as a mortgage, auto loan or credit card, the lender (with your permission) will check your credit report and credit score from one or more of the major credit bureaus. Because the inquiry is tied to an actual credit application, it can affect your credit score. Read more: Hard vs soft credit inquiry: What you need to know.

5. Keep your credit balances as close to zero as possible. I.e. pay off your credit cards in full every month. You can avoid late fees by making the minimum payment every month, but if you want to build excellent credit efficiently, pay off your card in full.

6. Do use your credit line, but keep your credit utilization rate under 30%. I.e., rather than max out your credit cards, use less than 30% of your available credit limit at any given time. Read more: Credit utilization rate: What is it, and why should you keep yours low?

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