You can improve your credit score by knowing when your credit-card lender reports your activities to Experian, TransUnion and Equifax, the three main credit bureaus. Before you apply for a loan or new credit card, you can pay down your balance prior to the reporting date and raise your score. Your lender usually reports your information to the credit bureaus one time per month on or around your payment due date. If you check your credit report consistently, you will typically see changes or score updates occur around the beginning of the month. This is due to the fact that the credit-reporting agency assimilates all new data throughout the previous month and updates your credit file with the new information. Here are other strategies you can follow to keep your credit report in tiptop shape.
Pay on Time
Paying on or before your due date is a great habit to start, especially when you're just starting out with credit cards. According to MyFICO.com, late payments determine 35 percent of your credit score, which is more than any other factor. When you pay cards on time, your credit score goes up, but when you pay late, your score goes down. Over time, a low credit score can cost you a lot of money when you apply for such things as other credit cards and car loans.
Stay Below 30 Percent
Credit utilization is how much of your available credit you are using. For example, if you have a $500 credit limit and you purchase $250 worth of clothes, you have used 50 percent of your available credit. To keep your credit score at its peak level, you should use less than 30 percent of your available credit. Even if you run up your balance during the month, you can still pay it down to 30 percent or less by the due date. This way the credit card company reports the lower balance to the credit bureaus. Using the previous example, that means you should pay your balance down to $150 or less by your due date.
Check Your Report Regularly
If you already have a credit card, you begin checking your credit report on a regular basis. You need to make sure everything the report contains is accurate information. Believe it or not, 79 percent of credit reports contain some type of error. Some substantial errors -- 25 percent -- can cause a credit denial, according to the National Association of State Public Interest Research Groups. You have a legal right to get a free report from all three credit reporting agencies once a year.
Protect Your Score
If you learn how to protect your credit now, you’ll save money on interest rates throughout your life. Whenever you buy a car, the lender checks your credit report. If you have a high credit score, you get lower interest rates -- and that saves you money. Here's a quick breakdown of what credit reporting agencies look for in determining your credit score: On-time payments influence 35 percent of your score. Low use of available credit impacts 30 percent of your score. The length of credit history is 15 percent of your score. New credit and types of credit each make up 10 percent of your credit score.
- MyFico.com: What’s In My FICO Score?
- The Wall Street Journal: Monitoring Your Credit Score and Credit Report
- Debt.org: How Long Does It Take for Something to Reach Your Credit Report?
- CBS News: 4 in 5 Credit Reports Have Errors
- Experian. "How Often Is a Credit Report Updated?" Accessed April 15, 2020.
- Experian. "Credit Score Can’t Be Calculated." Accessed April 15, 2020.
- Consumer Financial Protection Bureau. "Who Are the Credit Invisible?" Accessed April 15, 2020.
- Experian. "What Is a Credit Utilization Rate?" Accessed April 15, 2020.
- First General Bank. "How to Read Your Credit Report," Page 1. Accessed April 15, 2020.
- Consumer Financial Protection Bureau. "Credit Score Myths That Might Be Holding You Back From Improving Your Credit." Accessed April 15, 2020.
- National Credit Union Administration. "Credit Card Payments." Accessed April 15, 2020.
- FICO. "Payment History." Accessed April 15, 2020.
- Equifax. "When Does a Late Credit Card Payment Show up on Credit Reports?" Accessed April 15, 2020.
- Consumer Financial Protection Bureau. "What's a Credit Inquiry?" Accessed April 15, 2020.
- Experian. "What Is a Hard Inquiry and How Does It Affect Credit?" Accessed April 15, 2020.
- Federal Trade Commission. "Credit Scores - What Can You Do to Improve Your Score?" Accessed April 15, 2020.
- Time. "This Man Has 1,497 Credit Cards and Near-Perfect Credit Score." Accessed April 15, 2020.
- Guinness World Records. "Largest Collection of Valid Credit Cards." Accessed April 15, 2020.
- FICO. "The Importance of Credit History Length." Accessed April 15, 2020.
- Experian. "750 Credit Score: Is it Good or Bad?" Accessed April 15, 2020.
Chris Brantley began writing professionally for a financial analysis firm in 1997. From 2000 to 2004, he worked as a financial advisor, specializing in retirement planning and earned his Series 7, Series 66 and insurance licenses. Brantley started his full-time writing career in 2012 and has written for a variety of financial websites, including insurance, real estate, loan and investment sites. He holds a Bachelor of Arts in English from the University of Georgia.