Money

3 mistakes you could be making that are messing up your credit

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Large group of students standing in line at college campus.

Millions of Americans could soon see their credit scores rise by 20 points because a number of civil debts and tax liens will be removed from public records. Even if you aren't part of that group, there are other ways to increase your score. And there are certain mistakes you should avoid making if you want to keep a good score.

CNBC Make It spoke to the three major credit bureaus, and here's what they say you may be doing wrong.

1. You're choosing the wrong card

If you don't have a card already, do some research before you get one. The card offered by your bank may seem familiar, but other credit companies may offer more rewards, like Uber discounts or deals for dinning out.

However, be careful of high interest rates, especially with retail cards, which could have higher rates than average. Billionaire Mark Cuban doesn't use credit cards for that very reason.

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If you do have a credit card, "don't get too comfortable" with it, the founders of the multimillion-dollar site Get.com suggest.

"The fact that credit card offers are constantly changing and have different terms and conditions, signing bonuses, rewards programs and rewards earning rates make it tough for people to find the best cards," they say. "It's important to frequently update yourself with the latest credit card offers."

In fact, "it's good to have one or two cards," Rod Griffin, director of Public Education at Experian, tells CNBC Make It. "Make a small purchase each month and immediately pay the balance. Doing so will help build a positive, active payment history without taking on debt."

2. You don't pay off debt, or pay too little

The main factor that contributes to credit score is payment history, Equifax director of public relations and communications Nancy Bistritz-Balkan says.

"This includes information about how you have repaid the credit you have already been extended on credit accounts, such as credit cards, retail department store accounts, auto loans, student loans," she tells CNBC Make It.

"Also included in the payment history are details on late or missed payments, public record items, and collection information."

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According to Griffin, most credit score models take late payments into consideration. Card holders should aim to pay as much of their monthly balance as they can, "on time, every time."

If you have a high balance, "stop spending and pay it down," he adds. "The balance should never exceed 30 percent of the credit limit."

3. You close cards the wrong way

Cancelling a credit card could cause your credit score to go down. If you do it in an appropriate way,you can minimize the damage.

Take into account how long you have had the account. The longer you've had the card, the worse the impact will be if you cancel it.

"The length of your credit history can also have a large impact on your credit," Heather Battison, vice president of TransUnion, tells CNBC Make It. "Keep this in consideration before closing old accounts before a loan application."

So be deliberate. And be sure to pay off the balance first.

If you want to improve your credit or maintain a good score, experts suggest you set and work toward goals. And be patient.

"It takes time to build a strong, positive credit history," Griffin says. "Don't use credit cards for impulse purchases. Be deliberate about credit card use.

"You can't go from [no credit] to fabulous [credit] overnight," he adds. "Understand the difference between credit and debt. Credit is a financial tool. Debt can become a financial problem."

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