There’s been plenty written about how to fix bad credit, but what if you want to keep your credit score high—and maybe even take it to new heights?
Paying bills on time is a no-brainer. You’ve been doing that all along, which is how you established a good credit score in the first place. But what else can you do to incrementally inflate your FICO score? That ubiquitous three-digit credit rating follows you wherever you go and has the potential to buoy your borrowing power or tank it. Might as well do what you can to keep it healthy.
The good news is that we’re collectively improving our credit. In August 2021, the average FICO score reached an all-time high of 716—the highest since tracking began in 2005. That’s particularly encouraging since 40% of Americans polled in 2019 had no idea how their credit score was determined.
The most ambitious borrowers have their sights set on the 800 Club, whose exclusive members have credit scores of 800 or higher. If your credit is already strong, you may very well be within reach. Here are seven tips for how to keep your credit score high and edge it toward excellent territory.
1. Regularly check your credit score and dispute errors.
Like humans, credit scores are imperfect. Mistakes happen, and when they do, your credit score takes a hit. Don’t assume all the data collected by credit rating bureaus about you is 100% accurate. More than a third of people who checked their credit reports for a Consumer Reports study found flaws.
You’re entitled to one free credit report each year, so be sure to do an annual check for errors. If you find any, resolving them may take some time. Rating agencies can take up to 30 days to investigate disputes, but your credit score should see an immediate improvement once the errors are corrected.
2. Consolidate balances on a single low-interest credit card.
There’s a common misconception about keeping smaller balances on several credit cards. Chipping away at lingering debt across too many accounts can actually hurt your credit score. Try consolidating these so-called nuisance balances but don’t close your old cards out.
There are multiple ways to wrangle credit card debt, but a balance transfer credit card is often a good choice. Find a card that doesn’t charge a transfer fee and offers a 0% APR introductory rate. That way, you’ll avoid interest during the promotional period. Just make sure the card’s normal interest rate isn’t too steep when it does kick in.
3. Keep a close eye on your credit utilization ratio.
Your utilization ratio is how much credit card debt you’re carrying compared to the limits on those cards. Rating agencies monitor this percentage, which is why you want to keep it as low as possible. Most experts recommend 30% or less, but those with the highest credit scores rarely exceed 10%.
Keep this marker in mind for individual cards and your overall debt. It accounts for 30% of your credit score. Bottom line: If your utilization ratio creeps up, your credit score will inch down. Be prudent about purchasing with plastic and try to pay more than the monthly minimum to avoid this quandary.
4. Don’t take advantage of every tempting credit card offer.
Those credit card offers from your favorite stores or online retailers are relentless. Save 10% on today’s purchase. Earn rewards. Receive special offers. The temptation is real, but it’s not wise to have a credit card everywhere you shop.
A credit check occurs every time you apply for one of these offers. These hard inquiries can temporarily lower your score about five points. Opening too many accounts around the same time—say, the holiday shopping season—will send your score on a downward trajectory.
5. Think twice before closing out old credit cards.
Here’s where this whole credit score thing gets even trickier. Above, we advised you not to open too many credit cards and to consolidate debt if it makes sense. That said, you don’t want to close out all your old cards—even if they have a zero balance.
The length of your credit history accounts for 15% of your credit score. And longer is better in the eyes of the credit agencies. Plus, if you close several accounts, you’ll decrease your total available credit and potentially throw your utilization ratio out of whack. Unless there’s an annual fee, you’re better to keep unused cards around.
6. Consider using a credit boosting service.
If your credit score seems to have topped out and just won’t budge, don’t give up. At least one of the credit bureaus offers … well … extra credit for paying your monthly utility, phone and streaming bills on time.
Signing up for Experian Boost could raise your credit score by 12 points on average or even more in some cases. Launched in 2018, this free service allows you to link various accounts to prove that you’re current on your cellular plan or Netflix subscription. Experian says nearly 4 million people have used the service to raise their FICO scores.
7. Keep balances manageable and pay them off every month.
There’s one enduring rule for how to improve your credit score over time: Keep your credit card balances manageable and clear them every month. Credit isn’t about endlessly deferring payments; it’s about timing payments when they’re ideal for your personal cash flow.
It’s just a fact—credit agencies love to see you erase your credit card debt every month. Balances that hang around or slowly swell over time won’t do your credit score any favors. Adopting this practice will almost surely lead to impeccable credit. Added bonus: You don’t pay interest because you wipe the slate clean each month.
That, in a nutshell, is how to keep your credit score high. To maintain a good credit score, you must employ a number of tricks and techniques. If done right, you’ll reap the benefits with stronger credit and better rates when you need to take out a personal or commercial loan.
