High credit scores provide access to better rates and terms when you apply for new loans. In today’s high-interest rate environment, everyone needs to do everything possible to keep their costs down.

Boosting your credit score is one of the best ways. Here are five ways to improve credit scores and reach financial goals.

Why It’s Important to Boost your Credit Score

Your credit score determines whether you’ll get loans or credit cards approved. It may also determine if you get the best insurance rates or sometimes get a new job. So, it’s an important 3-digit number you should understand how to boost for the best results.

Credit scores start at 300 and go up to 850. An 850 credit score is perfect, but not many people have that score. The key is to keep your score between 680 – 750 for the best results. If your credit score falls below this threshold, there are simple ways to increase it.

Ways to Boost your Credit Score

Boosting your credit score won’t happen overnight. Depending on your current credit score, it can take a few months or longer. The key is consistency with your efforts and constantly checking your credit report (for free) to ensure your credit history reflects your efforts.

Pay your Credit Card Balances Down

Your credit utilization makes up 30% of your credit score. This refers to the amount of outstanding credit compared to your credit line. Ideally, you should have no more than 30% of your credit line outstanding.

For example, if you have a $1,500 credit line, you shouldn’t have more than $450 outstanding. This doesn’t mean you can’t use your credit card for more than $450, but you should pay the balance before the due date to avoid carrying a large balance.

Take Care of Collections

If you made mistakes and have collections on your credit report, try negotiating with the collection agency. They may accept a settlement if the debt is legit and you have the money to pay a lump sum.

If you can’t pay it in one lump sum, consider negotiating a payment plan to pay the debt off. In your negotiations, consider asking them to remove the collection from the credit report after you pay it as agreed. Your credit score already reflects the defaulted debt from the original creditor, so the collection is a repeat of what’s already on your credit report.

Don’t Close Old Accounts

Your credit age is 15% of your credit score. Closing old accounts decreases your credit age and can cause your credit score to drop. Instead, keep the accounts open. Not only does this increase your credit age, but it also keeps your credit utilization rate low which is good for your credit score.

Pay Credit Card Balances Monthly

Carrying credit card balances can hurt your credit score if they are too high. Instead, try keeping your credit card balances at 30% or less of your credit line. This will help your credit score the most. So, if you use your credit card, pay it off within the grace period, or at least pay as much as possible.

The higher the balance you carry, the higher the risk you pose to lenders, which hurts your credit score. Show responsible use of your credit cards, and it will reflect in your credit score.

Ask your Credit Card Company for a Credit Line Increase

If you use your credit responsibly, your credit card companies may grant a credit line increase. This is another way to decrease your credit utilization rate. For example, if you have a $1,000 credit line with $500 outstanding and request a $2,000 credit line, you decrease your credit utilization from 50% to 25%.

Final Thoughts

Always knowing the state of your credit is important. Check your free credit reports often, and make any necessary changes to improve your credit score. The key is to make your payments on time, not overextend your credit, and avoid applying for new credit too often.

With these simple hacks, you can maintain a good credit score and get the most attractive terms on your financial products.