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5 Simple Tricks for Boosting Your Credit Score

Christy Bieber, The Motley Fool

Having a good credit score is essential. Your score affects the interest rate you pay and whether you can even get approved for loans at all. Auto insurers, landlords, companies you want to do business with, and potential employers may all check your credit history.

The good news is that there are some simple ways you can boost your score so you can come across as a trustworthy borrower. Here are five tips and tricks that can help you to improve your credit, sometimes with minimal effort.

Tablet showing an 811 credit score.

Image source: Getty Images.

1. Request increases in your credit limits

Your credit utilization ratio is one of the most important factors that affects your credit score. It's determined by the amount of available credit used. If you have a $1,000 line of credit and have charged $300, you have a 30% credit utilization ratio. It's ideal to keep your ratio at 30% or less, but lower is better.

Paying off debt lowers your credit utilization ratio and is the best way to boost your score -- as well as to save on interest costs. But there's also a quicker way to lower this ratio: asking for a credit line increase.

Most credit card companies offer credit line increases on a periodic basis when you're a good customer who pays on time. Often, you can get an increased credit line without a credit check, which is good, because too many credit checks could hurt your score.

To see if you're eligible for a credit line increase, sign into your account online and look for the option to request one. This is usually found under account tools or account services. Or give your credit card company a call and ask if you can get a larger credit line without a hard credit check.

2. Try to get a mix of different kinds of credit

Having a mix of different kinds of credit also helps boost your score. That means you'll tend to have a higher score if you don't just have credit cards but also have been responsible with mortgages, auto loans, or other types of loans.

Obviously you don't want to borrow money if you don't have to just to boost your credit score. But if you're going to buy a car with cash, you could always consider taking out an auto loan and paying it off in a month or two. That's what I've done in the past when buying cars, and the mix of different credit on my report helped me earn a credit score of over 800 (850 is a perfect score).

You do want to be careful to avoid applying for too many different kinds of credit at one time to avoid multiple hard credit checks. So try to pace yourself when borrowing. If you open a new credit card or get an auto loan, wait a while before borrowing again.

3. Set up autopay on your credit accounts

Missing a payment is one of the worst things that can happen to your credit, as a good score could drop by more than 100 points with one payment that's 30 days late. To make sure you're never tardy accidentally, set up autopay with all of your credit cards and loans.

Make sure your autopay covers at least the minimum payment. Ideally, you'll have enough wiggle room in your budget to set up autopayments for the full balance due on every account. There's no need to carry a balance just to boost credit. Be sure to check your payment processes properly, too, as you don't want a mistake to be made.

4. Ask creditors to erase past mistakes

Did you know that some creditors will remove a record of past late payments from your credit report? You can write your credit card issuer a letter to ask if they'll remove a black mark from your credit history. This is often referred to as a "goodwill" letter, because essentially you're asking the creditor to do you a favor and help you fix your credit.

You're much more likely to get a creditor to agree to remove the late payment from your record if it was a one-time mistake and you've been a good customer. Write a short, simple letter explaining why you were late and asking if they might be willing to help you out. The worst that can happen is they'll say no.

5. Make sure your report is error-free

Finally, you want to make sure your credit score isn't hurt by someone else's bad borrowing behavior. This means you need to check your credit report regularly to see if there are any mistakes. If you see accounts you didn't open, late payments you didn't make, or other problems, you can dispute the information with the credit reporting agencies, which must launch an investigation.

As many as one in five credit reports have mistakes on them, so it's absolutely worth checking yours. Visit AnnualCreditReport.com to pull a report for free once a year from each of the major credit reporting agencies. If you space out your free reports, you can check for mistakes once every few months so you're always on top of the info on your report.

These tips will help you boost your credit score

Following these tips can help you to get a good credit score and a credit report you're happy for companies to see when deciding whether to do business with you. Earning a good credit score is worth the effort, so get started today.

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