5 easy steps to improve your credit score

Your credit score is one of the most important numbers in your life. It decides whether or not you qualify for a mortgage, can get an apartment or will get the best rate on car or renters insurance. With so much on the line, it is important that you know how to improve your score in the coming year.

Take Care of Past Due Debts

If you have any debt payments that are 30 days or more past due, you should work with your creditors to either pay them or roll them into your current balance. If you have more than one missed payment, you should first resolve the most recent missed the payment and work your way backward. This is because more weight is given to your most recent activities as opposed to mistakes made in the past.

Pay Down Your Credit Card Debt

Ideally, you will use no more than 30 percent of your credit card balance. If you have multiple cards, you should use no more than 30 percent of your total credit. By paying down your debt, you reduce your credit card utilization rate to a reasonable level while also reducing your monthly payments.

Apply for More Credit

Another way to reduce your credit card utilization rate is to apply for more credit. If you have used $100 of a $100 balance, you are using 100 percent of your available credit. However, if you apply for another $100 of credit, you are now using just 50 percent of your available credit. In lieu of applying for a new credit card, it may also be possible to ask that your current credit limit is increased.

Improve Your Credit Mix

Lenders like to see that you have a mixture of both secured and unsecured debt. They also like to see a mix of installment and revolving debt. Therefore, it may be a good idea to finance your car purchase with a personal loan as opposed to paying in cash. When combined with a monthly credit card payment, it can be a quick and easy boost to your credit score.

If you don't like the idea of carrying debt, you should still benefit even if you decide to repay your lender in one or two payments. The idea is that the loan and your timely repayment of that loan are on your credit report for lenders to see over the next seven years. The fact that you have experience with secured debt should help you when it comes time to apply for a mortgage.

Cancel Your Newest Credit Card

Your credit score is partially determined by the average age of your credit accounts. By getting rid of your new accounts and keeping your old ones, it will appear as if you have had many years of experience with credit and debt. This should increase your credit score while also making it easier to get the best terms on auto or home loans.