5 ways to improve your credit score (and help you get a mortgage, too)

To capitalize on lower loan interest rates for everything from a mortgage to a car, you’ve got to qualify for them, which means having a good credit score. So, what do you do if your credit isn’t good enough to get a lower rate? “People tend to overthink credit,” says Matt Schulz, chief industry analyst for CompareCards.com. “Ultimately, it’s about paying your bills on time every time, keeping your balances low, and not applying for too much credit too often.”

There are some steps you can take today to increase your score. Here’s a look at how to get started.

Paying your bills on time is the most important factor in improving your credit score, says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News and World Report. If you’re prone to miss payments, let technology help you: Set up autopay for as many of your bills as you can, ensuring you never fall behind.

“Getting the lowest rate possible can save so much money over the life of that mortgage, and one of the keys to saving a lot of money is having a great credit score,” Harzog says.

If you have credit card debt, work toward paying it down and avoid making any big purchases between now and the time you apply. Why? Your credit utilization ratio. This shows how much of your available credit you’re using. If you reduce or keep that number low, it can help improve your credit score. Your credit utilization ratio is across all of your credit cards. Harzog says that 10% or less is the goal (zero is best).

If you’re able, make an additional payment on your card just before the credit bureaus reports your balance to the lender. This will ensure your balance is at the lowest possible point just before you’re considered for approval and can improve your credit score.

Whenever you apply for a new credit card (even store credit cards), you have a new credit inquiry. If possible, avoid any new credit inquiries while trying to improve your credit score. These inquiries can knock two to five points off your credit score, according to Harzog. Although these dings are temporary, you don’t want to take any risks when it comes to getting the best interest rate possible.

When you close a card, your credit score can take a hit, simply because you’re losing access to credit, which can improve your credit utilization ratio. As long as a card is in good standing, having an additional card (even if it’s not being used at all) doesn’t hurt, and can technically help by adding to your available credit. If you do want to close a card, try to time the closing so it happens after you get your mortgage.

As you’re making changes, check in on your credit report to see how you’re impacting your score. Your credit card or bank may be sending this information to you already, or you can check annualcreditreport.com. You can pay for a FICO score or get a free educational score to just show if you’re going in the right direction.

It’s also important to check that your reported balances are accurate, that there are no mistaken reports of late payment, and that all the accounts attributed to you are yours. Triple check your basic information and check for fraud. Get a report from each of the bureaus (Experian, Transunion, Equifax) and check them individually.

“Removing any errors or inaccuracies on your credit report can make a major difference to your credit score,” Schulz says. “People would be surprised to know just how often mistakes appear on credit reports, and these errors can be significant. The last thing you want is to have your credit damaged by mistakes that you didn’t even make.”

By making on-time payments, every time, paying down debt, and not adding more to your credit card balances, Harzog says you may see an uptick in your score in about one billing cycle. But it may take time to improve your score by a bigger measure. “Depending on how much you need to improve your score, you may need to stick with this level of diligence for a while. “Credit is a marathon rather than a sprint,” Schulz says. “A home is the biggest purchase most people will ever make, and a low rate on that home can save you thousands of dollars over the years.”