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How to improve your credit score

Determined to improve your credit? Follow these seven steps


If you’ve decided to work on your credit but don’t know where to start, our detailed guide will set you on the right path.

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Your credit score is an extremely important number in your financial life.

It’s calculated based on the information in your credit report and reflects your borrowing risk to lenders. Your credit score plays a major role in credit terms you get, such as interest rates and whether you’ll be approved at all. On top of that, your credit can be checked when you’re signing a utilities contract – or even when you’re applying for a job.

For these reasons, it’s essential to work on building your credit and improving your score. Read on to learn the steps and find useful tips on how to improve your credit score.

Check your credit

Before you can start working on your credit, you need to know where you currently stand. Check your credit to see what is currently affecting it and keep an eye on it to track and address any changes.

There are many ways you can check your credit for free. For example, your credit card issuer may provide you with credit monitoring tools. You can also go directly through credit bureaus and track your credit using the tools they’re offering – such services are available through Experian and Equifax.


A screencap of Capital One’s credit monitoring tool, CreditWise

You can also request a free copy of your credit reports from each of the three bureaus from

Keep in mind that most free scores offered by card issuers or other online credit monitoring services are purely educational. This means that they can give you an idea of where you stand, but your lender will likely see a different credit score when pulling your credit.

Be sure to check your credit regularly – it’s best to make a habit of it or set up reminders so you can always stay on track.

“All the credit monitoring apps do you zero good unless you set a calendar reminder to check them monthly,” says Nicole Schmied, founder of SmartCookie Hacks. “Maybe your smartphone is set to send you a notification, but if you’re like me, you get dozens of notifications an hour. Do you stop for all of them? Me either … Which means I won’t even notice that I haven’t gotten a notification. Avoid all of this. Sign up and set a reminder once a month to take a peek.”

Pay on time

Payment history is the most crucial factor in credit score calculations. It accounts for 35% of your FICO score and signals to your lenders how likely you are to repay your debts. Even one 30-day late payment can do significant damage to your credit score. Even worse, it will stay on your credit report for up to seven years.

The longer the delinquency, the bigger hit your credit score will take. Charge-offs and repossessions can be credit score killers. It can take a long time after such events to rebuild your credit, so it’s best not to let them happen.

“Almost all lenders have the option to set up automatic bill payments,” says Robert Linker, personal finance publisher and writer at Family Debt Planning. “It takes a few minutes to be set up, but you have peace of mind that the lender will take out your payment automatically every month.”

If your lender doesn’t offer this option, Linker suggests setting up the process with your bank. It’s more complicated, but your bank can make automatic payments to any account that you set up with it.

Reduce your credit card debt

When you’ve ensured you’re paying all of your bills on time, the next step is to work on repaying your debt.

If you carry a balance on your credit cards, it can increase your credit utilization ratio – the second most important factor in credit scoring. You can calculate the ratio by dividing the balance by the credit limit and multiplying the result by 100 to get the percentage. You want it to be below 30% to avoid damage to your credit and in the single digits for the best results.


A screencap of the Experian app showing credit utilization

“Reducing debt should start with high-interest credit card debt first,” says Howard Dvorkin, CPA and chairman at “Call your creditors to negotiate lower interest rates, pay off your highest interest credit card and make the minimum payments on your other credit cards.”

See related: Script to ask for a lower credit card rate

This repayment method is called the avalanche, and it helps you save the most money on interest. Its alternative is the snowball method, that instead focuses on paying off cards with the lowest balances first.

Diversify your credit portfolio

It’s also beneficial for your credit score to have different kinds of debt on your credit report. Your credit mix is only responsible for 10% of your FICO score, but when you’re just starting your credit journey or need a few points to reach the next credit tier, adding a new type of account can help.

“Investors tend to diversify their investment portfolios so as to minimize the risk of heavy losses. Likewise, you can diversify your credit portfolio in order to boost your credit score,” explains Matt Woodley, founder of Credit Informative. “By having a nice selection of credit instruments – like mortgage, car loan and a credit card or two – you demonstrate to creditors that you are capable of managing multiple forms of credit.”

An easy way to increase your credit mix is with a credit-builder loan, which lets you borrow a low amount of money that will be held by the lender. Once you’ve paid off the full amount, you’ll get access to the money you borrowed.

Hold on to your credit cards

Once you pay off your credit card debt, you might think it’s a good idea to close one or a few credit cards you’re not planning to use, especially if you’re paying annual fees. However, that may not be the case.

Closing a credit card means decreasing your total credit limit – and your credit utilization ratio.

To avoid losing credit score points, it’s best to keep your credit cards open. If you think you won’t use the card often and it charges an annual fee, call your credit card issuer and ask to downgrade. That way, you’ll keep your account and switch to a credit card that better suits your needs.

See related: How to switch to a new credit card from the same bank

Additionally, make sure you’re still using all your cards – your issuer might close your card if there’s no activity on it. For instance, Dvorkin suggests using unused or underused cards to sign up for a low-cost subscription.

Only apply for new credit when needed

While having a healthy credit mix is good for your score, avoid adding debt just for the sake of having more credit lines or loans on your report.

When you apply for credit, it triggers a hard inquiry that might shave a few points off your credit score. A single inquiry won’t do much damage – it will stop affecting your score after a year and disappear from your report in two. However, if you apply for more credit too often, the damage can be more significant.

On top of that, too many inquiries might give lenders and creditors an impression you’re struggling financially and accumulating debt you might not be able to repay.

Don’t pay for ‘credit repair’

You may have heard of credit repair companies that promise to quickly “fix” your credit. If you’ve found yourself considering using their services, be aware that there’s nothing they can do for you that you can’t do yourself – for free.

You can’t remove accurate data from your report. You can dispute things that you know to be errors, and you don’t have to pay anyone to do that for you.

Many of these companies flood credit bureaus with disputes of information that is, in fact, accurate. While the bureaus are investigating these claims, they’ll remove the items in question from your credit report until they’re verified. During this time, you may see your scores increase, but that’s only temporary: The accurate information will be verified and return to your credit report.

The hard truth is, if you know you’ve made some credit mistakes that ended up on your credit file, they will stay there as long as they’re supposed to. The credit bureaus won’t remove an accurate item from your report. Otherwise, credit reporting wouldn’t be truly fair.

Final thoughts

Improving your credit requires discipline and consistency, but if you take the right steps, eventually they will lead you to a better credit score. Keep working on your credit, and don’t forget to keep an eye on it. Sooner or later, you will see progress.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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