How to Boost Your Credit Score

Your credit score is a three-digit number that will follow you for every major purchase you make throughout your life. In fact, each time you pay a credit card bill or even apply for auto insurance, your credit score will be updated or impacted. Your credit score could affect the type of auto loan you receive - or whether or not you're approved for a loan in the first place. This is why consumers who are applying for Missouri car loans should carefully review their credit information before taking out a loan.

Developed by the Fair Isaac Company, credit scores are often called FICO scores. The three major credit bureaus, Equifax, TransUnion and Experian, all assign three-digit numbers ranging from 300 to 850 to millions of consumers. The score reflects a borrower's overall credit worthiness; the higher the score, the more likely the borrower will responsibly pay back the amount owed. As a rule of thumb, consumers should work to get a score of 700 or higher. Borrowers with high scores are considered low risk, and thus typically receive loan approvals faster and tend to borrow money at lower interest rates. There are strategies consumers can employ to gradually improve their credit scores. It can take time - months, or even years - but consumers who maintain these habits find that their scores are higher than those borrowers who do not.

Gradually boosting a credit score

Follow these tips and, over time, your credit score may benefit:

Check your credit report annually: By reviewing your credit report at least once a year, you'll make sure that the information on file is accurate. Be sure to notify the credit bureaus of any mistakes - they could harm your score.
Pay your bills on time: More than 30 percent of your FICO score is related to your payment history. If you pay your bills on time, your score will benefit. Miss a payment or two, and it's almost guaranteed that your score will fall. If you encounter a bad month and are unable to make a payment, call your lender or creditor immediately. There is a chance that arrangements can be made to keep your account in good standing.
Borrow only what you can afford: It can be tempting, but resist the urge to borrow beyond your means. This includes houses, cars and electronic gadgets such as televisions. Remember that it's your responsibility to pay these items back, and failure to do so could ruin your financial life.
Keep balances low: Your credit score measures how much revolving debt you carry each month in relation to your available credit. This means that if you have a credit card with $10,000 available, you shouldn't carry a balance of more than $3,000 from month-to-month. Show that you're a responsible borrower by managing your debt effectively.
Be boring: Credit scores like boring borrowers, those who open a credit account and keep it for 15 years. Borrowers who open and close credit accounts haphazardly find that their scores suffer. Only open an account if you need it, and keep it for several years. Remember that opening and closing a credit card account quickly could hurt your in the long run.