A good credit score is crucial to purchasing real estate, but even if you’re not in the market for a new home, working to increase your credit score is incredibly important. Essentially, your credit score is an indicator to potential lenders about your history of handling debts. Credits scores are calculated by three agencies (Equifax, Experian, TransUnion) and range from 300-850, with lower scores indicating a higher risk to lenders.

Your credit score can be referenced when buying a car, renting a home or apartment, applying for a credit card or to be a member of a credit union, among other things. If you’re perceived as a higher risk, you can be charged higher interest rates (check out this infographic on credit.org for some estimated numbers) or even denied loans. So, it’s very important to know what betters and what hurts your credit score. Here are four tips to keep your credit score moving up.

Tip #1: Fix Mistakes

You’d be surprised by how many people have mistakes in their credit report that are lowering their scores. So, the first thing you need to do is check your credit score to find out where you’re at and if there are any incorrect judgments against you that you need to work to correct.

Tip #2: Make Payments On Time

Making regular, on-time payments shows that you’re responsible and trustworthy, so do all you can to make sure you pay all that you need to and before the due date. Every time. Many banks and lenders allow you to set up payment reminders or automatic payments; take advantage so you don’t allow yourself to forget and get behind.

Tip #3: Keep Your Available Credit High

There is such a thing as good debt. But, even though it’s good to carry small balances, utilizing a high percentage of your credit can actually count negatively against you. Credit agencies look for the percentage of usage on your credit cards and using less than 10% is better for your credit score.

Tip #4: Keep Balances Low

If you’re paying down on several credit cards, isolate those that are lowest and pay them off first. That way, you’re not carrying a high number of balances, which can affect your score negatively. Don’t worry if those zero balances still show on your credit report for a bit. Those are proof of good credit, and can help paint the picture of your financial responsibility.

Although there are many ways to strengthen your credit report, these are among some of the most important. The bottom line is: aim for a credit score of 700 or higher, and be patient and diligent in achieving that. Because the truth is that it takes longer to better your credit score than it is to harm it. So be mindful and show restraint.

Go forth and borrow responsibly!

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