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4 easy ways to improve your credit score

If you have a not-so-great credit score, don't worry: You won't be stuck with it forever.

Still, improving your credit rating is going to take some time. As long as you're consistent and avoid some common mistakes, your score will gradually increase. Here are four easy ways you can improve your score relatively quickly:

1. Pay off your credit card balances
If your balance is around $200, pay the full amount if you can manage it. Why would you bother, though, if your minimum monthly payment is only $50? 

Paying the minimum monthly bill on time and in full will help your credit score, but not as much as paying off your debt completely. This behavior will boost your trended credit data. This type of information lays out how much money you paid on loan and credit card balances over time. For example, your trended credit data shows if you paid the full balance or the minimum payment on your credit card between February and August. 

In fact, if you're thinking of buying a home sometime in the future, Fannie Mae requires lenders to use trended credit credit data when underwriting mortgages on single-family houses, so paying off balances will come in handy when you're ready to buy a house. 

Pay off your credit card balance, instead of making the minimum payment. Pay off your credit card balance, instead of making the minimum payment.

2. Increase your credit limit
If you keep your spending under control, raising your credit limit will actually benefit your credit score. How? It affects your credit utilization rate, which measures how much available credit you can use on your credit card. Bankrate said it's best to keep your utilization rate below 20 percent

Think of it this way: Say your credit card's limit is $3,000, and you want to use it to buy a $700 computer. That would put your credit utilization rate at 23 percent. Before buying your new gadget, increase your credit limit to $4,000 so you're only using around 17 percent of your available credit.

3. Don't remove old debt
At first glance, you may think you want to remove old debt, such as a car loan you paid for years ago or a personal loan you took out when you were in college. Before you do that, ask yourself: Did you ever miss a bill? Did you make principal payments to pay off the loan faster? If you never fell behind on payments, then keep the debt on your credit report.

"If you only have one credit card, apply for another one."

Why? That car loan represents diligent, responsible behavior, which will reflect positively in your credit score. Bankrate spoke with credit expert John Ulzheimer, who compared good debt to "making straight A's in high school and trying to expunge the record 20 years later." 

4. Get a second credit card 
If you only have one credit card, apply for another one. Why? This will benefit your credit history if you have good bill payment habits. Think of it as more positive data in your credit report. In addition, Forbes noted this will increase your available credit, which is the kind of thing credit bureaus want to see. 

Also, be aware that many lenders want to see at least two credit cards on your report when you apply for a mortgage, because this shows you can handle multiple debts responsibly. 

If you have a bad credit score, these decisions will improve it in the long run, but if you need to obtain a line of credit or a loan now, consider getting an alternative credit score. These reports factor in your rent and utility bill payment habits, and could show lenders that you're financially responsible if you make those payments on time and in full.

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