Four steps to improve your credit score

Last month I took you through the complicated array of scores, methods and versions that result in all of us having dozens of different credit scores. This may have left you wondering, “How can I keep all that straight?”

Fortunately, you don’t really have to. With a few thoughtful moves, you can get a good credit score or improve your current one, no matter how it’s being calculated. Though each score will be different, they should all fall in the same general range. Your goal: excellent.

Here are four simple steps to help get you there:

Be in the game. It’s a bit of a paradox: to improve your credit score you have to wade into the waters of debt. Notice that I didn’t say you have to carry balances and pay interest. You just need to have accounts and use them. This typically starts with getting a credit card or loan from an institution that will report it to the credit bureaus. For those just starting out, a secured card might be a good way to get in the game.
Be on time. Your credit score is designed to inform potential lenders if you’re worth the risk. Will you pay them back, or will you just take the money and run? This makes it imperative to pay on time every time, no matter which scoring model is being used.
Be debt-averse. There’s a fine line between using and abusing. Restraint is a good thing. If you use too much of the credit extended to you at any point in time, you’ll actually hurt your score rather than help it. So don’t carry balances on credit cards or lines of credit, and if you’re forced to, keep the balance to less than 20 percent of what’s available. You have to be in the game, but not all-in.
Be patient. Credit history includes the word “history” for a reason. Potential lenders want to know that you’ll be a good borrower in good times and bad, and building or rebuilding that image of reliability takes time. Who cares if you’re a good borrower for a month? A few years or a decade is a bigger deal.

If you want to dig into the details of how credit scoring works, visit myfico.com and your.vantagescore.com. But if details aren’t your thing, these tips should get you started.

J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.