How to Boost Your Credit Score

This time of year, it’s common folly to worry about your dress size or your belt line as if your behavior the rest of the year had no effect. It’s just as foolish to forget about your credit score, the three digits that tell lenders how thoroughly they can trust you, until the holidays.

You can hurdle the fear of knowing your score by first confronting the fact that you have a credit report, which financial writer Manisha Thakor likens to a “24/7 reality TV camera that has been pointed at your wallet. “  A person’s payment  history and credit habits drive the score up and down between 300 and 850. Below 500 is naughty, above 650-700 is nice. Thakor, who cowrote a book called Get Financially Naked, urges you to lift your score as high as you can.  The numbers cast a wide net.

Loan officers, credit card companies, mortgage lenders, landlords, and potential employers rely on credit reports to justify charges, explains Carrie Coghill Kuntz, spokesperson for a site called CreditFYI. A poor credit score could scare off a potential employer or landlord Or it can cost  thousands of dollars. Kuntz says a borrower with a credit score of 625 could pay an annual percentage rate (APR) of 6.44% on a $216,000, 30-year loan. That produces a monthly mortgage of $1,357. A borrower with a 775 credit score may pay an APR of 4.85% on the same loan, resulting in a $1,140 monthly payment. Over 30 years, the homebuyer with the 775 score will pay $78,120 less than the borrower with the 625 credit score.

Now that you’re paying attention, here’s how to boost your credit score.

Check your credit report. According to the Public Interest Research Group,  an estimated 80 percent or more of credit reports have errors. You can check all your credit reports and correct them for free here. Correct any mistakes. Dispute them in writing, directly with each credit bureau and include copies of documents that support your claim. Mail with a return receipt requested form.

Be fanatical. Pay your bills on time, always. Resist the temptation to take on every credit card offer that comes your way. Keep balances low if you can’t pay in full monthly. Only apply for credit when you need it and don’t apply for a lot of credit in a short period of time, says Rod Griffin, director of public education for Experian.

Forget tricks. “Don’t close unused or old credit cards as a short-term strategy to raise your score. Shutting down credit accounts lowers the total amount of credit available to you, and it also gives additional weight to any balances you do have. When it comes to calculating your credit score, closing your oldest accounts can actually shorten the length of your reported credit history and make you seem less creditworthy, says Thomas Fox, community outreach director at Cambridge Credit Counseling.

So keep measuring, all year round. This is one number you can’t afford to shrink.