Consumer Watch: Three ways to improve your credit score

Improving your credit score is not as daunting as it might sound. Try these three moves to make a positive change (KOKH).

If you are trying to figure out how to increase your credit score, there is no way around the fact that debt payoff is important, but smart debt pay off can put you in a better position when it comes to a healthy credit score. That's important if you are looking to buy a car or even a house in the future.

Credit and credit cards are not bad words. The problem is that credit can be tempting, and cause people to make mistakes that affect their credit scores in a negative way.

According to Experian, a good FICO score is above 670. If you hanging below this number, these are some tips to get that score up.

1. Check your credit report for mistakes.

There are three major credit reporting companies: Equifax, Transunion, and Experian. You can request a free copy of your report every 12 months. You can also join sites like Credit Karma or Credit Sesame, and you'll be able to check your score and dispute errors.

β€œIt tells a story about how you handle money. Are you good at paying your bills? And if you have a bad story -- bad hits on your credit report, you may get turned down for loans,” says Justin Cupler, a personal finance contributor at The Penny Hoarder.

2. Don't open new accounts.

Having more free credit than debt will increase your credit score. People can make the mistake of trying to open a new credit card to achieve this, but that's not the way to do it. This is because you could get declined, and you'd have another negative mark on your report.

3. Pay down the right things.

Complete debt payoff is ideal, but don't get overwhelmed. Work on getting your credit card debt down to less than 50-percent use, and this will bump up your credit score while you work on full pay off.

It is also important to keep your oldest accounts open. Credit age is a factor on your credit score, so an old account in good standing will keep your score healthy. If you have no credit cards because your credit score is too low to get approved for one, personal finance specialists say a secured credit card is a good option. You pay for the amount of credit you get ahead of time. It's a small amount and can benefit your credit score, but if you have issues handling money, it is critical to make a point of paying off any outstanding amount in full every month to develop better habits.

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