7 Ways to Improve Your Credit Score Before Year End

Whether you’re trying to earn those extra rewards points or are just a little cash poor before the next paycheck, more and more shoppers are turning to credit cards for holiday purchases. In fact, a recent study found 43 million Americans carry a balance on their credit card in hopes of improving their credit score. The unfortunate reality of the situation is that carrying a balance doesn’t factor into a FICO credit score. Luckily these 7 simple strategies will help you boost your credit score before the end of the year and start 2019 with a fresh financial slate!

Check Your Credit Score

The best way to understand your credit score is to go straight to the source. Federal law allows you to get a free copy of your credit report once every 12 months from each of the major credit reporting companies: Equifax, Experian and TransUnion. Each determines your credit score differently, so your score may vary slightly in each report. While there’s no shortage of sites offering free credit reports, many are subscription services that will end up costing you. To get your truly free credit report, visit AnnualCreditReport.com.

Review Reports Regularly

Since the free credit check from the federal government allows you access to three different reports, it’s often worth spacing these out throughout the year for regular monitoring. If you notice any errors or irregularities, contact the company immediately to get more information. These could point to potential fraud, and the sooner you act the easier it is to get a resolution. Should you run out of free reports, turn to your credit card apps to keep an eye on things. For example, Capital One offers a service called CreditWise that projects your score, explains important factors and provides notifications about significant changes.

Pay On Time

Despite our best intentions, every now and then a payment can slip through the cracks. From credit cards to student loans to utilities, on-time payments play a significant part in your overall credit score. Avoid errors by setting up automatic payments when available, or create a calendar on your phone with the due dates of important bills. If you don’t feel comfortable with automatic payments, many companies also offer services that will send you a text or email to remind you of upcoming payment due dates.

Treat Credit Like Debit

Some of the most simple wisdom when it comes to credit cards is to charge only what you can afford. Unlike debit cards, however, they don’t cut you off when the money in your account runs out. Even if you have a high credit limit, be careful in pushing it to the max. Credit-to-debt ratio is one of the main components in determining your credit score. To figure out this number, divide your balance by the amount of available credit. If you’re consistently using the maximum amount of credit available, you can start to see negative impacts on your overall score. According to FICO, it’s best to keep your credit-to-debt ratio below 30%.

Avoid Extra Inquiries

Most credit checks happen casually behind the screen of a computer. You provide some basic information, and someone comes back and tells you whether or not you’ve been approved. Though the process seems simple, it’s important to limit the number of inquiries into your credit score. If lenders see you’ve applied for numerous accounts in a short amount of time it sends up some serious red flags. Avoid running into trouble by limiting checks on your credit to only the most major items such as cars, mortgages and critical credit cards.

Don’t Cancel Your Cards

After hearing about all of the factors that affect your credit score, you may be tempted to consolidate and close that Kohl’s card you haven’t used in five years. While it seems a little counterintuitive, long-standing lines of credit can boost your score, even if they’re rarely used. They not only show you’ve been able to stay in good standing with the lender, they also help leave a history to base your score on offering you more options in the future.

Negotiate With Creditors

This tactic doesn’t work on your monthly credit card bill, but if you find yourself in serious trouble with debts such as outstanding medical bills, it’s worth seeing if you can negotiate. In some cases you may be able to get additional fees waived that will help reduce the overall burden. Even if you can’t get the costs down, establishing a regular payment plan will help ease your financial strain each month by finding payment options that fit with your budget so you don’t feel so overwhelmed.