Whether you have good credit, bad credit, mediocre credit, or no credit at all, most of us have room for improvement. After all, building your credit up gives you a better chance of qualifying for credit cards and loans, and overall, can make life simpler. While bringing up your credit score isn’t something that can happen overnight, there are steps you can take today to put you on the path to improve your credit score.

Why is Good Credit Important?

You are probably familiar with the ubiquitous notion that establishing a good credit score is important, and it is indeed a powerful financial tool. If you don’t take good care of your credit, it won’t take good care of you.

A good credit score can be leveraged into great deals, like loans for a mortgage or vehicle, insurance premiums, credit cards, and even cell phone plans. A poor credit score can leave you missing out and, ultimately, paying more.

Here are a few other ways your credit score can affect you:

Job search

Many employers run credit checks during the hiring process—typically credit reports, not scores. A potential employer might hesitate to hire you if you haven’t demonstrated financial responsibility.

The ability to start your own business

If you’ve ever dreamt of starting your own business, keep in mind that you would need to acquire a business loan. This would require you to have good credit to qualify.

Other Monthly Bills

You might not realize it, but your credit is needed to establish utility services. Your electric, telephone, or water company might check your credit to determine your ability to pay on time.

Since credit scores can leave an indelible mark on our financial lives, it pays to always be on top of them and understand how our actions have effects. It doesn’t matter what age you are or what your income is, it’s never too early to defend, build, and take advantage of great credit.

Tips to Improve Your Credit Score

1. Pay Your Bills on Time

While accidents do happen, keep in mind that even one late payment can harm your credit score. Don’t rely on your memory for something as important as staying on top of payments. Consider setting up payment reminders or automatic payments. Most credit card companies and banks provide this service, so take advantage!

What lenders care about above all else is that you’re reliable and can be trusted to pay back your debts. By ensuring your bill payments are made on time every time, this will boost your overall credit score.

One late or missed payment isn’t the end of the world, but if it happens, make a call to your lender and ask for forgiveness.

2. Get Rid of Credit Card Balances and Debt

As Ben Franklin eloquently puts it, creditors have better memories than debtors. As tempting as it is to put your bad money decisions behind you and let old debts drift away into oblivion, that just isn’t going to happen. Keep track of your debts. Just because you can’t remember how much you owe, trust me, they know.

Start honing in on and eliminating your nuisance credit card balances to improve your credit score. One way to do this is by finding all of your credit cards that have smaller balances on them, and paying them off as quickly as possible. It’s better for your credit score health to use the same card—preferably the one with the best interest rate—rather than charging $100 on one card and $50 on another.

If you have several credit card balances, consolidating them with a personal loan can improve credit scores.

3. Check for Mistakes on Your Credit Reports

According to the Federal Trade Commission, roughly 5% of consumers have credit reports with errors that are bad enough to tarnish their credit score, which can lead to higher insurance premiums and paying higher prices for other financial products.

These errors can be anything from inaccurate credit card balances to improper payment statuses. You can get a free credit report once every 12 months from each major credit bureau, like TransUnion, Equifax, or Experian.

If you find any errors on a report, dispute them immediately to have them removed. Each bureau has a different online dispute process, but you can easily find more information on their website. You can also initiate disputes by calling or emailing them.

4. Diversity Your Credit Mix

Your credit mix refers to the differing types of accounts found in your credit reports and can determine 10% of your FICO score.

It’s a good idea to diversity your credit mix because lenders like to see a mix of revolving installment loans and credit accounts. The more you diversify money borrowed, the better.

*Note: This doesn’t mean you should take out a loan for the sake of adding more color to the mix!

The Don’ts

You have a few solid dos here that can certainly help improve credit scores, but what about the don’ts? Here are a couple to keep in mind:

Don’t close old or unused credit cards

The length of your credit card history also plays a significant role in most credit scores. By closing an old or unused account and opening a new one, you risk shortening the length of that particular card’s credit history. This action can also lower your available total credit, so avoid it if you can.

Don’t open several new credit cards

Every single time you apply for a loan or new credit card, a hard inquiry is generated which can stay on your credit reports for about two years. Too many hard inquiries, especially within a short time period, can have a negative impact on your credit score. So if you do apply for a new credit card, try to spread out your applications.

Improve Your Credit Score: Bottom Line

If you’re struggling with a low credit score, you’re actually in a better position to make quicker improvements than someone who has a strong credit history. Remember that even small changes can result in an increased score, so don’t stress too much! Learn from your mistakes—we all make them–and stay patient. Work on developing good financial habits that will last, and, with a bit of effort, you’ll soon find your credit health improving.

At Eloan, we work to empower you with the resources and expertise that will help you make financial gains, one step at a time.

* Please consult with your attorney, financial consultant/planner, accountant, and/or tax advisor for advice concerning your particular circumstances. The information contained herein is for general informational and educational purposes only and should not be construed as professional, tax, financial or legal advice or a legal opinion on specific facts or circumstances. The information or opinions contained herein should not be construed by any consumer and/or prospective client as an offer to sell or the solicitation of an offer to buy any particular product or service.