Mortgage late payments can also keep you from getting a home loan. Some lenders will bounce applications from buyers who've had a late mortgage payment in the previous 12 months. Guidelines and requirements can vary by lender and loan type.
The bottom line: Don't get behind on your bills. Making on-time payments can bolster your score.
Watch Your Balances
Racking up big balances on your credit accounts can hurt your score. It's less about owing money and more about how much you owe each month in relation to your available credit.
There's no magic number, but some financial experts recommend keeping your credit utilization ratio below about 30 percent. That would mean keeping balances below $300 on a credit card with a $1,000 limit.
Regularly paying down balances can help boost your credit score. FICO notes that in some cases carrying small balances could be better for your score than not using credit at all.
Secured Credit Cards
A secured credit card can be a great tool for building credit. Secured cards require an upfront deposit, often a minimum $300 or more. Unlike a prepaid credit card, creditors can report secured card activity to the credit bureaus.
Be sure to shop around and compare rates and terms when hunting for a secured credit card. These can be a powerful building block, but they're also typically a better fit for a shorter time frame. Rates and fees can be higher for secured cards than standard credit cards.
Keeping a healthy credit utilization ratio and paying your bill on time every month can help bolster your credit profile.
Becoming an "authorized user" on someone else's credit card is another simple strategy for improving your scores. Whether it belongs to a spouse, a parent or a trusted friend, look for older accounts with spotless payment histories and lower credit utilization. Plus, make sure the creditor reports authorized user accounts to the credit bureaus.
Getting added as an authorized user for a card entitles you to use it without being responsible for payments. This tactic also allows you to graft that sterling credit history onto your own credit profile.
As with secured credit cards, you might consider this a shorter-term strategy. Mortgage lenders will want to see you can establish credit on your own, not to mention follow through with on-time payments. But getting a secured card can be a great first step toward building a stronger credit profile.