If you’re planning on buying a house or applying for any large loan this year, here are two “do’s” and a “don’t” that may help you improve your credit score and possibly help qualify you for a lower interest rate. Remember, it may take 2-3 months for your score to show improvement!

• DO check your utilization rate (30% of FICO score). The amount you owe should never exceed 30% of your available credit, and below 20% is even better. Pay down what you owe or, if you have a good credit history, your credit card company may be willing to raise the credit limit on your current card. (Just don’t regard that as permission to spend more, however!)
• DO revitalize dormant credit cards, if they have healthy histories. Even if the card is still valid, if it’s been inactive for awhile, the creditor may no longer report it to the credit reporting agencies. Length of credit history is 15% of your score, so dust ‘em off and use ‘em! Just use these  additional cards for small purchases which you can pay off each month.
• DON’T open new or close old accounts. Each new account opened can ding your score, at least temporarily, and closing old accounts lowers the “credit available” part of your utilization rate. Along those same lines, don’t open a new account at every store just to get 10% off your purchase.

The best way to improve credit is to be a responsible consumer: pay all your bills (not just your credit card bill) on time and never exceed credit limits.

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