Today, maintaining a high credit score is one of the most important things you can do to increase your financial security. Not only does your credit score impact your ability to obtain loans, but it can also be used by employers to gauge your ability to make sound financial decisions. Additionally, poor credit ratings lead to higher interest rates which can add up to tens of thousands of dollars over long-term loans. While credit scores are determined by multiple factors which can sometimes be confusing to understand, it is possible to increase your score by following these five easy steps.

Analyze Your Reports

The first step toward increasing your credit score is to get informed. According to the Federal Trade Commission, each of the three main credit reporting agencies must provide consumers with one free credit report each year upon their request. Get a copy of your report and study it carefully to identify the positive and negative accounts listed on your report. If necessary, consult with a financial advisor who can help you make sense of it all so that you can make the proper changes to boost your score.

Dispute Inaccuracies

Inaccurate information listed in the report is one of the most common causes of a surprisingly low score. Check your report for any outdated accounts that are over seven to ten years old which should have been removed. Then, identify any accounts that contain erroneous information such as balances that have not been reported as being paid in full. Also, be on the lookout for accounts that do not belong to you which could be a sign of identity theft. If you can prove that you never authorized these accounts, then they can also be removed from your report.

Add Positive Accounts

Many people avoid opening lines of credit out of the concern that it will negatively impact their score; however, no positive reporting information can also contribute to low ratings. For this reason, you may need to open a small line of credit that you can use to demonstrate a regular history of repayment. Additionally, keep in mind that you may have positive accounts that have gone unreported. Utility companies, cell phone services and internet providers will often report your payment history to credit agencies at your request so that you can benefit from making consistent payments.

Diversify Your Credit

Your ability to manage multiple lines of credit and different types of accounts can also play a role in how your score is determined. Lenders prefer to know that you have successfully handled credit cards, installment plans and both long and short-term loans. If you find that you only have one type of credit on your report, then adding some diversity to your history can bring your scores to a new level. Just make sure to make prompt payments on any new accounts so that it can build your score up over time.

Pay on the Reporting Date

Everyone knows that paying by the due date is essential to avoid having a negative report bring down their score, yet many people proudly pay off their debts each month and still see very little change in their score. This is because the lender’s reporting date may occur before the debt has been paid in full. This means that each month, the credit report will still show a balance owed. To correct this, simply contact your lenders and ask when they make their reports. Then, adjust your payment schedule to ensure that the next reporting shows a zero or low balance.

When it comes to increasing your credit score, sometimes the smallest of changes can make a huge difference. From disputing inaccurate information to knowing when to pay your debts, you can start now to implement strategies that will increase your score and ensure your future financial security.