Pay twice a month. If you’re someone who charges close to your credit limit each month—even if you pay it off in full—it could damage your score. Your credit score is very sensitive to how much you’re charging compared to what your credit limits are. The solution is to pay off the bill in installments—once before the closing date and once after. This simple tactic can counteract some of the damage that results from being close to your limit.

Pay down the card that’s closest to its limit first. Your credit score is affected not only by your total debt-to-credit available ratio, but by that ratio for each individual card. If you have cards that are close to maxed out, pay off those first. If you have cards with balances that are way up there, it’s keeping your score low. Widening the gap between what you owe and your remaining credit limit will pay off by increasing your score.

This article appeared originally in the Debt-Proof Living Newsletter in January 2013.

"Debt-Proof Living" was founded in 1992 by Mary Hunt. What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt. Today, "The Cheapskate Monthly" is read by close to 100,000 Cheapskates. Click here to subscribe.

Publication date: March 6, 2013