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11 steps to improve your credit score

Credit-scoring models are like snowflakes: There are a lot of them, and no two are exactly alike. FICO alone sells 65 versions.

Because of that variation—and because a lender might not use the same credit scores you obtain—be aware of the range of your scores, and follow their trend over time. John Ulzheimer, a credit expert at the website Credit Sesame and formerly of FICO and Equifax, recommends these other points when managing your score:

Pay your bills on time

Payment activity accounts for 35 percent of a FICO score and 40 percent of a VantageScore. At least pay the minimum each month rather than fall behind.

Check your reports

Request one free credit report from a different reporting agency every four months through AnnualCreditReport.com. “Hard pull” credit inquiries—from a potential lender and others with permission from you—can lower your scores slightly. But there’s no penalty for checking for yourself; that’s called a “soft pull.” Credit-scoring companies consider multiple inquiries by lenders within 45 days as only one inquiry because the timing suggests that you’re shopping for interest rates for one loan, not multiple loans.

Don’t apply for multiple credit cards at once

Unlike applying for a mortgage, auto, or student loan, applying for several credit cards generates multiple hard pulls. Instead, carefully read prospective cards’ terms and conditions and apply for just one.

Don’t cancel plastic you don’t use unless it carries an annual fee

Stick the card in a drawer instead. Part of your score depends on the ratio of the credit you use on your credit cards to the total value of your open credit lines. Eliminating a card reduces your credit line and can raise the ratio, a negative.

Find the best credit card for you with Consumer Reports Credit Card Buying Guide. If you like rewards cards, check out Consumer Reports Rewards Card Buying Guide. And check out how a bad credit report can hurt you.

Don’t open too many new credit accounts at once

By doing so, you lower the average “age” of your accounts, which can lower your credit score.

Keep credit balances relatively low

Maintaining a revolving credit balance under 10 percent of your total credit line is wise, experts say. A higher ratio indicates an elevated credit risk.

Beware of points-driven high balances

If you charge everything on your rewards card for the points, switch to cash or a debit card for a couple of months before applying for new credit. Lenders can’t tell from your score whether you zero-out your balances every month. They’ll see your credit score, a snapshot in time, showing that you’re charging a lot relative to your credit limit, which is a negative.

Maintain a variety of credit types

Successfully paying an auto loan, a student loan, and credit-card bills over the same period, for instance, shows that you’re able to juggle different types of credit, a plus. That contributes 10 percent to your score.

Get a personal loan to pay off your credit-card debt

You can improve your credit score by paying off the score-damaging “revolving” debt of credit cards with the score-benign “installment” debt of a personal loan. And the interest rate on the loan is likely to be lower than the credit-card interest rates.

Pay off debt in collections

It’s always better to have zero balances on collections, but soon you might also see a much higher credit score as a result. The most current versions of VantageScore and the FICO credit score ignore collections with a zero balance.

Get a secured credit card after a bankruptcy

If you’ve been through one, start populating your credit report with good credit. Secured credit cards may be an effective way to rebuild your credit. A bankruptcy will have less impact on your score over time as long as you aren’t defaulting on new loans. But Chapter 7 and 13 bankruptcies stay on your credit report for 10 years.

This article also appeared in the January 2015 issue of Consumer Reports magazine.

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