You know what goes into a credit score is and why your score is important (if you don’t, check out this helpful resource). Now, what can be done about a low or middle-of-the-road score – especially if you’re trying to qualify for a mortgage? While it’s important to remember that everyone can improve their credit scores, you won’t see the results overnight. However, the steps you take now can have radical implications over time and will move you closer to the coveted “Excellent” score range. 

Here’s how to make a big impact on your credit score:

• Pay bills on time.Payment history, which myFico revealed makes up about 35% of your FICO Score, has the single-biggest effect on your credit score. By law, late payments cannot be sent to the reporting bureaus until they are 30 days overdue (though you can still incur late fees). So while you have a short grace period, staying on top of credit card payments and making sure any outstanding bills don’t go to collections  is critical – these dings can stay on your credit report for seven years.
• Reduce your credit card balances…or don’t carry a balance. We recommend setting up automatic payments whenever feasible to make managing your balances easier (bonus: automating also ensures your bills will be paid on time). Paying off credit cards monthly is a great way to keep your credit-to-debt ratio down, and see long-term benefits reflected in your score. Importantly, you do not need to carry a balance on your cards to improve your credit. 
• Apply for new accounts only when you need to. And only when you have a plan to pay them off. There should be a significant advantage to applying for a new card or line of credit, and showing too much new credit can drain your score. Length of history is responsible for about 15% of your credit score, so it’s important to show you’ve been able to keep accounts with a long history well-maintained. Often, when making a big purchase like a mattress or an exercise bike, the company will offer its own financing – but beware! Doing this is opening a new account – and counts against your credit. 
• Check your credit report for errors. Like humans, lenders and credit score reporting bureaus aren’t perfect. While rare, mistakes can be made that have serious implications for your score. Lender clerical errors, giving an inaccurate SNN, applying for credit under different names, or the reporting bureau inadvertently applying loan or credit information to the wrong account are all examples of potential issues. myFICO explains how to fix errors on your report, and you can check your credit report for free once a year at AnnualCreditReport.com.

Your credit score is a key component of your ability to borrow money.

Wondering how much a single late payment or maxing out your credit card will actually drop your score? FICO revealed what was once tightly guarded data on this topic; The Balance blog looked at how mistakes like these can affect two different FICO score situations. 

If you have bad credit or feel overwhelmed at the thought of tackling this alone, your mortgage banker will be able to give you a list of referrals for reputable credit repair services. Remember that while the above tips will help get your credit score in the best shape to quality for a mortgage or other major loan, there generally aren’t “quick fixes” – but the payoff is worth the effort.

Edited from original post published Jan. 3, 2017.