Manage your credit responsibly. Make payments on time and, if possible, pay your balances in full each month. And open new credit accounts responsibly.
- If you have no credit cards, consider opening a credit card account and maintaining small balances that you can pay off on time. Credit agencies consider having no credit cards a potential credit risk.
- Don’t move debt from card to card, or borrow to pay off loans. Credit agencies are wise to this—you may actually lower your score by owing the same amount in fewer accounts.
- Don’t open credit cards that you don’t need.
- If you’re young or are new to using credit, don’t open a lot of new accounts at the same time. The lower your average account age, the lower your credit score if you are a new borrower.
- Shop for one kind of loan at a time. Credit agencies can tell the difference between shopping for one loan and searching for many new credit lines. The latter is suspicious.
- Remember, you won’t raise your score by closing credit cards.
Of course, there is a price to borrowing money. And that price can vary depending on your ability to pay, the likelihood that you will pay off your debt on time and in full, and the collateral you have to back up the debt. The best credit deals—the biggest amounts of credit at the lowest rates—typically are offered to those with the best credit history.
That could be you, if you can build and maintain a good credit history.