If you're intending to borrow for a house purchase or business start-up in the future, you may be interested in raising your credit score. That's particularly the case if you have previously had issues - perhaps a bankruptcy in the past, or a difficult year with a few missed payments when you were between jobs. What action can you take to improve your credit score?
First of all, you can ensure you don't miss payments on loans, credit cards, and bills. That will have an immediate benefit as every month, your credit record is getting better.
Secondly, if you don't have credit, get some! Often, younger people are turned down for credit because they don't have any credit already. Remember, the credit score looks at your use of credit. If you don't have any credit, it can't look at it, and can't give you a positive score for keeping up with your payments. Equally if you've been through a tough time you might have cut up all your credit cards.
If this is the case, get a credit card, even if it's at an expensive interest rate or is a secured credit card (that is, you pay a cash amount equal to your credit limit into the account). Use it to do your regular shopping, and pay it off in full, every month.
Pay down your credit card balances where you can. A lot of people survive by just paying the minimum amount every month. The more you can pay down, even if it's a bit of a stretch, the better. The more spare room you have between your credit limit and the amount you're actually using, the better your score will be. If you have less than 50% of your limit used up, you look a much better bet than if you are maxed out.
Look for errors and inaccuracies on your account. Sometimes, an account you have paid in full and then closed will be listed as 'settled' suggesting that you didn't pay on time and in full. If this is the case, insist it is changed - you have a right to insist that information on your credit report is correct. Equally you may find delinquencies listed that are not yours - make sure you query these as they can be the result of attempted or successful identity fraud.
Finally, beware of scammers who will offer to repair your credit score for a one-off fee. They can't. But it wont stop them taking your money.