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3 Lazy Ways to Improve Your Credit

Feb. 15, 2015
Credit Cards
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Couch potatoes, lean in: You don’t need to take a brisk walk to the bank to boost your credit score. You don’t even need to make a phone call. With a few simple steps, you can improve your credit even without leaving your sofa – and that could make it easier to get an apartment, a loan, and in some cases, even a job.

Here are three ways you can give your credit a lift without moving a muscle:

1. Sign up for auto-pay

Setting a calendar reminder to pay your credit card bill every month is one way to make sure you’re on time every time – but that takes effort. If you have better things to do, consider automating the whole process, instead. Set up auto-pay by logging on to your card issuer’s website and changing your payment preferences. Here are some options you can typically choose from:

Pay in full every billing cycle.

If you know you’ll always be able to cover your entire balance each month, this could be a good option for you. When you have your card set up this way, you also won’t have to worry about carrying a balance and paying interest.

Pay the minimum every billing cycle.

If you have irregular income and can’t pay in full every month, this auto-pay option could suit you better. Consider making additional manual payments on your balance throughout the billing cycle, when you can afford it, to limit your credit card utilization – that is, how much of your credit limit you use.

Pay a set amount every billing cycle.

If you have a high balance, paying a set amount that’s higher than your minimum could be a good way to get out of debt and boost your credit score.

Once you set up a method that works for you, sit back, grab some popcorn and think about something other than credit cards.

2. Use savings to pay off debt (carefully)

If you already have more than six months of living expenses socked away in a savings account, consider using some of your savings to lower your credit card balances. Your credit utilization makes up 30% of your FICO score, so paying off those balances could give your score a huge boost and save you money on interest. The best part: You won’t have to put in more hours at work to cover those bills.

Nerd note: Making withdrawals from your savings account may be a good decision, but generally, it’s a good idea to avoid making withdrawals from your retirement accounts. In most cases, if you take from your 401(k) or IRA, you’ll have to pay a 10% fee as well as taxes, and that could eat up 35% of your withdrawal. If you don’t know whether you should use your savings to pay off debt, consider asking a financial advisor for expert help.

3. Stop applying for credit cards

This is the easiest step you can take to improve your credit score – you won’t even have to lift a finger. If you’ve gotten in the habit of applying for a new credit card every few months, you may be sabotaging your own credit score without even realizing it. Each inquiry may cost you five points a pop on your FICO score. Plus, every time you open a brand-new account, the average age of your credit accounts decreases. This influences the 15% of your credit score determined by the length of your credit history.

Instead of filling out all those credit card applications, take a look at the cards you already have and find out how to get the most bang for your buck. Do you have a card that gives you generous rewards for gas? Put it in the front pocket of your wallet so you’ll remember to use it the next time you go to the pump. You’ll be able to get more perks from your plastic while giving your credit score a lift – and you won’t even have to break a sweat.

Image via iStock.