Five Techniques to Boost Your Credit Score

The credit bureaus that determine your credit scores prefer people who play by the rules. Some rules are obvious- like pay your bills on time-but others are subtler. Here are five techniques that should help you go to the head of the credit score class.

At first glance, it appears that all you need to do to boost your credit score is pay your bills on time. Dig deeper into the scoring system for credit cards, and you'll find other factors play a significant role, as well. Follow these top five, and your score should jump:

1. Lower balances, higher scores

You'll likely lose one point on your credit score for every one percent of your credit limit that you use. If you have a $20,000 credit limit and you carry a balance of $10,000 (50 percent), you could expect your score to be shaved by approximately 50 points.

Try to keep your balances paid off in full each month. If you're planning to apply for a mortgage or car loan, try not to charge anything 60 days before submitting an application. You'll carry a lower balance, and should have a higher score as a result.

2. Be automatic on your payments

As previously mentioned, this is one of the key factors in determining your credit score. Fall behind more than 30 days on an account, and you could lose 50 points or more. To ensure that you don't get nailed with a late fee, set up as many automatic payments as possible.

3. More accounts, higher score

Credit bureaus want to see that you can manage your debt wisely. Therefore, keep a mix of accounts, such as two to three credit cards, a mortgage, and a car or small personal loan. If you manage a few accounts well, your score will rise.

4. The older the account, the better

If you have a credit card that you've been using for many years, keep it open, even if you find a better deal with another company. Credit bureaus look favorably upon accounts that have been open for longer than six months. Show restraint when opening new accounts. Having too many new ones could be an indicator that you're desperate for money.

5. Keep plenty of distance between your credit limit and your balance

Even if you make your payments on time, your score will drop if your credit limit isn't much greater than the size of your balance. Apply for a few extra credit cards to increase your credit limit. You don't have to use the extra dollars, but the bureaus will boost your score when they see you've got room to breathe.

Figuring out how to raise your credit score doesn't take a lot of deep thinking: Make those payments on time and don't get into too much debt. By heeding some of the nuances of the credit bureau scoring system, you'll add more points to your score, and shine in the eyes of lenders and credit card companies everywhere.