Your credit score is used to determine whether or not you will be approved for new loans and mortgages. It’s also used to calculate your interest rate, so maintaining a high credit score is a guaranteed way to save money on interest payments in your lifetime. Going through life with a poor credit score means everything will cost you more in the long term.

Improving your credit score makes financial sense, and it’s feasible with time and commitment. Here are some useful ways to increase your credit score.

Monitor Your Credit

To improve your credit score, it helps to know what’s working against you. Here at United Financial, we offer credit monitoring tools for anyone with our ID Protect feature on their checking account. This system can alert you to big changes in your credit.

Pay Off Any Outstanding Debts

This tip may sound like a no-brainer, but it’s crucial to remove the debts that are negatively impacting your credit. If you have an outstanding debt with a collection agency, call them and set up a payment plan. Many agencies will cease action against you as long as you’re making payments.

Manage Your Credit Utilization Ratio

Another factor that impacts your credit rating is your utilization rate. This is the ratio of debt you have on your credit card compared to your debt limit. You should keep your utilization to 30% or less. Ideally, it should be no more than 10%.

If your limit is $10,000, you need to get your outstanding balance down to $3,000 as soon as you are able. You might need to stop using the card, avoid any new debt on it, and pay more than your minimum required payments.

Keep Clean Accounts Open

Each credit card balance you hold contributes to your credit limit and utilization ratio. Even if you have a card you rarely use, keeping that line of credit open is more valuable to your score than closing the account.

Ask for a Credit Limit Increase

Another way to reduce your credit utilization ratio is to negotiate a higher credit limit. If you’re allowed a larger amount, the amount you’re currently using becomes smaller! Do keep in mind that a lender may issue a hard credit check if you request a credit limit increase, and that check will slightly affect your score.

Sign Up for Auto Payments

Many digital billing services include autopay capabilities, so take advantage of them and never miss a payment again! This is a good way to safeguard your score from declining because of forgetfulness! Making minimum payments does not hurt your score.

Consider Debt Consolidation

If you’re facing too many bills to keep track of, you could consolidate that debt into one balance transfer loan which is easier to manage with one monthly payment. The lump-sum loan can allow you to fully pay off collections and bills.

Add to Your Credit Mix

Your “credit mix” includes all of the types of accounts you’re paying on, including revolving credit and installment loans. An additional credit account in good standing may help your score. If you have only loans, try adding a credit account to your mix. If you have cards already, consider a credit rebuilder loan. These low-interest loans can help people build their credit back with regular payments.

Make a Plan and Stick To It!

The most important rule is to make your payments on time, even if you need to make minimum payments. If you need to rely on auto payments, that’s okay. Figure out how much you owe, what you can afford to pay each month, and stick to it. Improving your credit score isn’t instantaneous, but the effort is well worth the financial rewards.