Deciphering the factors that contribute to a credit score and the ways to improve that magic financial number might seem intimidating, but achieving the great credit score of your dreams is a somewhat simple matter of discipline and attention.

Whether your score is poor or on the verge of great, you know you want to improve it because you've already checked it. Understanding what constitutes your score means more than knowing the number, though. There are three major bureaus that report your credit: Equifax (yes, that Equifax), Experian and TransUnion. It's smart to check all three reports annually for errors or inaccurate information.

A credit score is based on payment history, credit utilization, length of history, credit mix and the amount of inquiries on your accounts.

Some of these factors are worth more than others and the two highest-weighted factors are your payment history and credit utilization. To optimize your score, you'll need to manage all of these factors carefully. Here are the best tips to improve your credit score.


Pay all bills in full and on time

This includes credit cards, utilities, rent and loan payments. Any balance that carries over to the next month or any late penalties incurred will hurt your score and quickly undo the work you've begun. Paying off debt contributes 30% to a FICO Score while your payment history contributes 35%. If you've let a payment go by accidentally, you can ask for the company to forgive the mistake, convince them not to report it to the credit agencies, or, at least, ask them to waive any late fees. A person with a history of on-time payments will have more bargaining power to try to earn this forgiveness but it's always worth a shot.

To avoid late payments, see if the credit or utility company offers payment reminders and turn them on if they do. And, for an extra level of protection, set up automatic payments from a checking or savings account. Be sure that the company will pull the full balance that's due and not just the minimum payment amount. Late payments will remain on your reports for years but older mistakes count for less and less toward your score as they age. Every positive step builds good credit and, simultaneously, reduces the effects of the older, bad credit. The faster you take charge of your future credit, the faster you'll earn forgiveness for the past.

Credit utilization

Credit utilization is the amount of your credit limit you spend each month. If a credit card offers a $3,000 limit and you spend half of it in one month, then your credit utilization for that month is 50%. The magic number according to most experts is 30%; keeping your usage under 30% (optimally, around 10%) will raise your score more quickly, as it evidences responsible borrowing.

The most obvious way to lower your utilization is to reduce overall spending but this might not be immediately possible. Paying off some of your balance before it's due will show the credit company a lower utilization when they close the statement. Opening another line of credit can increase your credit limit but do not open several lines in a short amount of time. This will sound like a warning alarm to the reporting agencies.

It's worth mentioning that closing old credit cards might not actually benefit you, though it sounds like the logical thing to do if you've stopped using a card. Some reports take into account the age of your oldest open account, and closing those unused cards might shorten your credit history and negatively affect your score.

Hard inquiries

Any time a company requests access to your credit report—such as for a car loan or mortgage—it is called a hard inquiry. Whether or not you are approved by the company, the hard inquiry affects your credit score. Several hard inquiries in rapid succession will negatively impact your credit. However, checking your own score has no effect.

Recovering from bad credit

All of the above steps are important long-term choices for healthy credit. But you might be trying to recover quickly from a major financial loss, like a foreclosure, short sale or bankruptcy, which could drop your score by up to 150 points. Unfortunately, these long-term methods are still the best ways to heal even the worst credit. One slightly more immediate action is to apply for a secured credit card. With a cash deposit—often $200—some banks will offer an equal or greater line of credit with which you can begin, carefully, to grow that magic number.

The keys in every case are discipline, diligence and patience. Improvement will happen gradually but it will happen. The more care you put into your financial decisions, the more quickly you'll boost and secure your credit health.

Tom Twardzik is a writer covering personal finance, productivity and investing for Paypath. He also contributes pop culture reviews for Popdust and travel writing for The Journiest. Read more on his website and follow him on Twitter.



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Home garden and porch

As anyone who has ever sold a house will tell you, you must prioritize curb appeal. Before a potential buyer even considers looking inside your house, they notice the outside first. Does it attract the right kind of attention? Does it take away from the feel you're going for? If you plan to sell sometime soon, you must think about these things. Here are some landscaping options to increase your home's curb appeal, so you can get the best price on your home.

Extensive Plants and Greenery

A barren front yard won't get you the price you want on your home. So, invest in at least a little bit of greenery to keep the surrounding area from looking too dead. Shrubs and bushes tie the house to the lawn that precedes it, and flower beds bring a pop of color to an otherwise drab structure. You can also strategically plant some trees to improve the overall feel of your home's exterior.

Lawn Care

As we mentioned, your lawn is one of the most prominent features of your home's exterior. A patchy, dried-up lawn will quickly drive your home's price way down. Some of the best landscaping options for your home's curb appeal involve improving your lawn for the next inhabitant. Overall fertilization, ground aeration, underbrush removal, proper mowing—all of these lawn care tasks contribute to a greener and more lively area that invites people to see your house, rather than stay away from it.

Paved Pathways

There's nothing like a broken and disheveled pathway to make someone think twice about buying a property. Just as you want the entryway in your house to be welcoming, so too should the pathway leading up to the house be inviting. The pathway from the street to your front door provides plenty of real estate to get creative with. You don't have to settle for a boring concrete pathway. Consider something more eye catching, like a cobblestone path or intermittent brick patterns, as a way to better welcome potential buyers.

Usable Outdoor Furniture

Landscaping doesn't just involve the ground you walk on; also included are the items you use as extras to the overall look. Outdoor furniture is one such extra that you don't necessarily need but can look quite attractive if done correctly. Staging is important with outdoor furniture. Old, broken-down pieces will only look like more work to the potential buyer. A few comfortable chairs, a bench, or a table with an umbrella really go a long way to improving your outdoor aesthetics.

A good tip for deciding on curb appeal items is to decide what you personally would want to see as a part of a welcoming home's exterior. You don't need to go overboard, but a little bit of forethought could net you quite a lot of extra cash in the sale.

Unfortunately, giving back can sometimes go haywire. If you're ready to make a donation, first consider common mistakes made when giving back.

Many people strive to support their community by donating their time or their money. When you find a meaningful cause, you might be quick to cut a donation check. Though it's admirable to be quick to act charitably, you should be wary of several common mistakes made when giving to charity. Being mindful of these mistakes and learning tips for making informed charitable choices can help you make the most out of your generous check.

Acting Quickly Out of Emotion

Mission statements are meant to be compelling. If you're an emotionally driven individual, it's natural to pull out your wallet at the sight of a sad puppy on TV or when informed about food insecurity over the phone. Unfortunately, not all charities are as effective or official as they may seem.

Take your passion for helping others one step further by making sure your chosen charity is legit. Speaking with a representative, reviewing their website and social media accounts, and looking at testaments online can give you a better idea of whether the organization is worth your donation.

Forgetting to Keep Record of the Donation

Don't forget that you can reap some financial perks from giving back! With the proper documentation of your donation, you can acquire a better tax deductible.

If you donate more than $12,400 as a single filer or $24,800 as one of two joint filers, you're eligible to deduct that amount from your taxes. So, when a charity asks if you'd like a receipt of donation, always answer yes.

Donating Unusable Materials

Most charities can utilize a monetary donation—it's the physical donations that usually cause some issues. Providing a local nonprofit with irrelevant materials or gifting them with unusable products are surprisingly common mistakes made when giving to charity.

Always check your intended charity's website for a list of things they do and do not accept. The majority of places will provide a guideline to donating or offer contact information to clarify any questions.

Strictly Giving at Year's End

As more and more people get into the holiday spirit at the end of the year, nonprofit organizations see an influx of donations. While it's great to spread holiday cheer via a monetary donation, it's important to keep that spirit going year-round.

With regular donations, charities can more effectively allocate their annual budget. Setting up an automatic monthly donation with the charity of your choosing can maximize your impact. You can account for a monthly donation by foregoing a costly coffee every once in a while.

Knowing how much you should spend on home maintenance each year is hard to figure out and may be preventing you from buying your first home. The types of costs you'll incur depend on the house you buy and its location. The one certainty is that you should start saving now. Read on to figure out how much to start setting aside based on the home you own.

The Age of Your House

Consider several factors when budgeting for home repairs. If you've purchased a new home, your house likely won't require as much maintenance for a few years. Homes built 20 or more years ago are likely to require more maintenance, including replacing and keeping your windows clean. Further, depending on your home's location, weather can cause additional strain over time, so you may need to budget for more repairs.

The One-Percent Rule

An easy way to budget for home repairs is to follow the one-percent rule. Set aside one percent of your home's purchase price each year to cover maintenance costs. For instance, if you paid $200,000 for your home, you would set aside $2,000 each year. This plan is not foolproof. If you bought your home for a good deal during a buyer's market, your home could require more repairs than you've budgeted for.

The Square-Foot Rule

Easy to calculate, you can also budget for home maintenance by saving one dollar for every square foot of your home. This pricing method is more consistent than pricing it by how much you paid because the rate relies on the objective size of your home. Unfortunately, it does not consider inflation for the area where you live, so make sure you also budget for increased taxes and labor costs if you live in or near a city.

The Mix and Match Method

Since there is no infallible rule for how much you should spend on home maintenance, you can combine both methods to get an idea for a budget. Average your results from the square-foot rule and the one-percent rule to arrive at a budget that works for you. You should also increase your savings by 10 percent for each risk factor that affects your home, such as weather and age.

Holding on to savings is easier in theory than practice. Once you know how much you should spend on home maintenance, you'll know what to aim for and be more prepared for an emergency. If you are having trouble securing funds for home repairs, consider taking out a home equity loan, borrowing money from friends or family, or applying for funds through a home repair program through your local government for low-income individuals.