Three easy, free ways to improve your relationship with your credit card

Depending on your spending habits, you probably have a love/hate relationship with your credit card company. You're also probably aware of how APRs, rewards, and balances work. But did you know that if you have a decent history with your credit card company, there are a few easy and free things you can do to improve your credit score? The following list describes a few activities that most card companies will allow:

1. Periodic rate reduction -
If you use your card regularly and do not carry a balance from month to month, check your credit card statement to see if your APR is automatically reduced. If it isn't, call customer service every six months and ask for a reduction.

Even if you don't carry a monthly balance, it's always a good idea to have the lowest APR available to you. If one day you lost your job and had to live off your credit cards for a while, it'll be much easier to survive with on12% APR than 24%. My Bank of America card automatically reduces my APR after a few months of good payment history. Over the past year, my APR has come down four percent.

2. Periodic credit limit increase -
If you have good payment history, halfway decent credit, and/or a recent surge in income, you can request that your card company increase your credit limit to a reasonable amount of your choosing. Doing this does not usually count as an inquiry to your credit report, thus not causing detriment to your credit score, but you'll definitely want to ask first. Be careful when doing this, as inquiries for your credit report knock down your credit score a few points.

Increasing your credit limit will increase your credit score. A significant percentage of your credit score is based on your available credit. An high, untouched limit represents responsibility on your part and results in a beefed-up score.

Note: Only do this if you've got complete control on your spending. If you're a person who treats your credit limit like a bank account balance, this is not a good idea; your limit should only be increased to improve your credit score. In fact, this would be a great move on your part in the months previous to buying a car or house (the limit increase takes a month or two to show up on your credit report).

3. Pay off before billing date -
I'm a proponent of paying off credit cards in full every month, as close as possible to the due date. This allows me to earn interest on the money in my checking account for as long as I can before writing a check to Visa. However, if you're trying to boost your credit score, it might be worth your while to pay it off early -- before the next statement date.

If you use your credit card for a significant amount of your purchases, pay it off every month, and are trying to increase your credit score (for a home or car purchase), try sending a check just before the end of the statement period. Look at your last statements and try to find the day of the month that the statement ends (not when it becomes due). The balance on that day is what will become due and is also the amount that is reported to the credit bureaus.

A significant part of your credit score is based on what percentage of your available credit you are using. By sending a check to pay off the credit card a few days before the last statement date, the credit bureaus will think that you have zero balances and report upon that fact accordingly (probably increasing your score). If you wait to pay off your debt until its due date, any new mortgage or auto lenders will see that debt and consider it while making their decision. Though a little bit of debt on your report is completely normal and OK, credit bureaus do not differentiate between those who pay it off each month and those that carry a balance. Personally, in the month previous to applying for a new loan, I pay off my balances early.