Ways to improve your credit score

Your credit score can build you up or tear you down.

A difference of just 10 or 20 points can make all the difference when it comes to buying homes and cars.

“Credit is the ability of someone to borrow money,” said Joel Garris, a financial advisor with Nelson Financial Planning.

The average credit score in the U.S. is 716, and only 23.3% of Americans have a credit score in the 800 to 850 range. Bad or fair credit, which ranges from 580 to 669, can be a result of late payments or using more than 30% of your credit limit.

Taking steps to improve your credit can help you lower the cost of borrowing.

“Unfortunately, it’s not a ‘one-size fits all’ solution on that; it takes diligence, it takes patience in order to improve your credit score,” Garris said. “The first thing that we would advise folks to do is actually get ahold of their credit report from the three credit scoring agencies.”

Pay your credit card balances strategically, pay down the balance before the billing cycle ends.

“Make sure that the accounts that you have, have a long length of time to them, so you don’t wanna go and pay things off too quickly because that reduces the amount of age that is associated with that particular credit item,” Garris said.

Blend your credit. Lenders like to see that you can handle multiple accounts at once.

“Lastly, you want to make sure that you don’t apply for credit too often. That pulling of credit actually winds up potentially reducing your credit score if you do that too frequently,” Garris said.

Don’t forget to check your credit report at least once a year and dispute any errors.

You can get a free copy of your credit report from all three credit bureaus once a week, until the end of the year. Then, you are entitled to one a year from all the bureaus.

For more information, visit Annual Credit Report and the Federal Trade Commission for consumer advice.