The best strategies to build and improve your credit score

You might not have had to think much about your credit score until you tried to rent an apartment or make a large purchase, like a house or a car. Today, pretty much everything runs on credit.

Your credit score is a three-digit number that represents your creditworthiness, with scores ranging from around 300 to 850. Lenders use your credit score, and additional information such as income, to determine whether to approve you for a line of credit, how much the line of credit should be, and what interest rate to offer you. A high credit score can help you qualify for better interest rates, while a low credit score can make it difficult to get approved for credit at all. 

Building or improving your credit score can take time, but there are some steps you can take to improve your creditworthiness today. Remember, everyone’s financial situation is different, so while something might work for you it might not work for someone else.

The first step to building or improving your credit score is to check your credit report regularly. You can get a free copy of your credit report from each of the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—once a year. You can also use a credit reporting app or tool to check your credit score more often.

Next, you’ll want to review your credit report for errors, such as accounts that don't belong to you or late payments that were reported incorrectly. You can dispute any errors you find on your credit history directly with each credit bureau. You can dispute things like inaccurate account information, duplicate reporting, and fraud or identity theft.

One of the most important factors in your credit score is your payment history. Make sure to pay all of your bills on time, including credit card payments, loan payments, and utility bills. Late payments can have a negative impact on your credit score and can remain on your credit report for years.

While payment history is just one aspect of determining your credit score, it makes up a pretty large portion of how your credit score is calculated. Consider setting up your bills—like utilities, credit card payments, and your car payment—on autopay, that way you don’t miss a future payment.

Your credit utilization is the amount of credit you're using compared to the amount of credit you have available. Try to keep your credit utilization below 30% of your available credit, if possible. For example: if you have a credit limit of $10,000, keep your balance below $3,000. 

High credit utilization can have a negative impact on your credit score. Consistently paying down your credit monthly will help with this.

Having a mix of different types of credit can improve your credit score. For example, having a credit card, an auto loan, and a mortgage can show lenders that you can manage different types of credit responsibly. However, don't apply for credit you don't need just to diversify your credit mix. Over time, and as you start to pay for more things, your credit will likely diversify on its own.

If you have a limited credit history or a poor credit score, a credit builder loan or a secured credit card can help you build credit. With a credit builder loan, you’ll typically make payments into a savings account and the lender reports your payments to the credit bureaus. With a secured credit card, you’ll typically make a deposit that becomes the basis for your credit limit. Make sure to choose a reputable lender and read the terms and conditions carefully before applying.

Using a rent payment reporting service like Jetty Credit can help you build your credit score just by paying rent. If you live at a property that offers Jetty Credit your rent payments will automatically be reported each month to the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—giving you the opportunity to improve your credit score.

Building or improving your credit score takes time and effort, but it's worth it. A high credit score can help you qualify for better interest rates and save you money in the long run. By checking your credit report for errors, paying your bills on time, reducing your credit utilization, diversifying your credit mix, and considering a credit builder loan or a secured credit card, you can improve your credit score and achieve your financial goals.