At a Glance: Have a credit card, pay bills on time and keep balances low to improve your credit score.
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Along with a solid University of Phoenix GPA, there is another number that can impact your future success: your credit score.

Every time you take out a student loan, open a credit card or pay a bill, you are adding a piece of information to your credit history, or FICO score. Why does that matter? Because lenders use your FICO score to determine what interest rates to charge you. Having good credit can therefore save you thousands of dollars over the life of a loan. Also, some landlords and employers review credit scores in the application process.

Your score reflects your payment history, amounts owed, length of credit history, types of credit used and new credit opened. Credit scores can range from 300 to 850. The median score for today’s adult is about 687. A “good” credit score is 700 to 749, “very good” is 750 to 799 and an “excellent” one is 800 or higher.

Want to boost your credit score or maintain the stellar one you already have? Cary Carbonaro, a financial planner and author of “The Money Queen's Guide,” shares seven ways to improve your score: 

1

Start early, but responsibly

About 63 percent of Americans have at least one credit card. If you’re among the minority of Americans who aren’t carrying around plastic, you might want to consider applying sooner rather than later. That’s because banks are eager to form relationships with customers at a young age and often extend credit to students enrolled in college. Get started with a card that has a small line of credit and pay your statement in full every month. That consistent behavior can improve your score over time.

2

Pay bills on time

Set up reminders or automatic payments from your bank account for regular bills. Timely payments are more important than paying in full. But your best bet? Pay your bill in full, on time, every single month. 

3

Check your credit score regularly

Use a service, such as creditkarma.com or annualcreditreport.com to get your reports from Equifax, TransUnion and Experian for free once a year. Known as a “soft inquiry,” checking your score does not negatively affect your score.

4

Fix mistakes

If you detect an error, contact the credit bureau or lender. For general credit maintenance, make sure you are regularly checking the balance on all your cards and understanding the impact that paying off certain accounts could have on your credit score.

5

Keep balances low

The amount of available credit you use — known as credit utilization — should be less than 30 percent. That means, for instance, if a credit card gives you a $10,000 limit, charge no more than $3,000 in a given payment cycle. 

6

Hang on to older cards

Have a credit card or two that you rarely use? That can actually be a good thing, since your credit history is strengthened by long-standing accounts. So instead of closing the accounts, simply stop using them. Put those cards in safekeeping and regularly check account activity to monitor potential misuse by an identity thief. 

7

Limit your applications for new credit

Credit card companies are wary of people who apply for credit regularly, especially if they keep getting turned down. Also, experts suggest avoiding several “hard credit inquiries” at once, where a potential lender is reviewing your credit for an auto loan or mortgage, for example.


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