Five Tips for Raising Your Credit Score

Your credit score is one of the most important numbers attached to your identity. In some cases, it is even more important than your social security number. Unfortunately, many people have a low credit score because of late payments, too much debt, or simply because of inaccurate information on their credit reports. Here are five tips you can use to raise your credit score for better mortgage rates and a better chance of getting approved for loans.

1. Check for Inaccuracies
One of the quickest ways to boost up your credit score quickly is to scrutinize your credit reports and look for inaccuracies. There are three main credit reporting bureaus – TransUnion, Experian and Equifax – and they often have different information. Get a copy of all three and go through each of them a couple times a year them to see if there are negative marks that don't belong there. If you see something that doesn't belong, contact the bureau immediately and have any inaccuracies removed.

2. Avoid Late Payments
Late payments can bring down a credit score quickly and significantly. In fact, your payment history accounts for about 35 percent of your overall credit score. That's fairly significant! Making your payments on time is also the best and quickest way to begin building up your credit again if you have damaged it. Information about late payments can stay on your credit report for up to seven years, but a track record of 12 months of on-time payments can increase your score with noticeable results.

3. Reduce Your Debt Ratio
If you can pay off some of your debt, you can raise your credit score significantly. This is especially true if your credit cards are near the "maxed out" limits. Ideally, you should keep about 60 percent of your available credit free on each card. If this means spreading your debt among several cards, then do it. The amount of outstanding debt accounts for about 30 percent of your credit score.

4. Keep Old Accounts Open
Part of your credit score is based on the average length of time that you have had open accounts. As a result, keeping your older accounts open increases that average and boosts your credit score in the short run. The length of time that you have had credit accounts for about 15 percent of your score. If you want better mortgage rates and higher approval rates for credit, don't close those old accounts unless it is absolutely necessary.

5. Plan Ahead
When applying for credit or loans, the lenders will undoubtedly check your credit score. Unfortunately, this can ding your score if it happens too often. When considering a mortgage or some other type of loan, do your research before applying with different companies. If you have to apply with more than one company, try to complete your applications within the same month. For purposes of auto loans and mortgages, inquiries are only counted as one if they are all done within the same 45-day time period.