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How to improve your credit score

Using credit cards wisely could send your score in the right direction


Struggling with a low FICO credit score? Don’t worry: You can take some simple steps to improve your score. You’ll just need to change your negative financial habits.

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Your three-digit credit score is a key number. It gives lenders and credit card issuers a snapshot of how well you’ve managed your credit and paid your bills in the past. If you’re stuck with a low credit score, you might struggle to qualify for loans or credit cards. And if and when you do, they’ll come with high interest rates.

Any credit card, loan and mortgage payments you make each month get reported to the three national credit bureaus: Experian, Equifax and TransUnion.

If you pay these bills on time, your credit score will rise. But if you pay any of these bills 30 days or more past their due dates, your credit providers and lenders will report them as late to the credit bureaus, causing your credit score to fall.

Fortunately, you can improve a weak credit score. Once you do, you’ll qualify for loans with lower interest rates and credit cards with valuable rewards programs. The key is to pay your bills on time and cut down on your existing debt.

Take these steps to improve your credit score

If you have bad credit, you can take several steps to boost it:

Decrease your credit utilization ratio

Your credit utilization ratio measures how much of your available credit you’re using. The lower this number, the better it is for your credit score. If you have a high amount of credit card debt, paying it down can boost your credit score.

You might turn to balance transfer offers to pay off your credit card debt. Some balance transfer cards even offer a 0 percent introductory APR — usually for 12 to 18 months. This gives you the chance to pay off your existing credit card debt without having to pay interest on it. Just make sure you pay off the debt you’ve transferred before the 0 percent interest offer ends. If you don’t, your remaining balance will be assessed at your card’s normal APR.

Become an authorized user

As an authorized user, you’re added to an existing user’s account. You’ll be sent your own credit card that you can use to make purchases, but the primary account holder remains responsible for making the payments.

When the primary account holder makes their on-time credit card payments, they are reported to the national credit bureaus in your name, too. This develops a record of on-time payments in your credit file, something that can help you build a credit history or improve a bad credit score.

Most commonly, parents add their children as authorized users to help them build their credit scores. If you’re an authorized user, make sure to only spend what the account’s primary cardholder and you agreed upon.

Make on-time payments

The most important step to raising your credit score is to pay your bills on time. Paying 30 days past your due date on loans that are reported to the credit bureaus — including mortgage, auto, student, credit card and personal loans — could cause your credit score to fall by 100 points or more.

Link nontraditional accounts

Typically, many payments that consumers make — like rent, medical, utility and phone bills — don’t get reported to the credit bureaus. So, they don’t help increase credit scores. You can, however, sign up with rental reporting agencies that will report your rent payments to the credit bureaus, such as Rent Reporters, Rental Kharma and LevelCredit.

Be aware, though, that while reporting your rent through these services might help your VantageScore and some alternative versions of your FICO score, it won’t help boost the FICO score that lenders most often use when determining if you qualify for mortgages and other loans.

You can also sign up with services such as Experian Boost and UltraFICO. These link to your checking, savings or money market accounts to give the credit bureaus a better understanding of how you manage your money. The goal is to help consumers who aren’t paying back loans or haven’t used credit cards extensively build a solid credit score.

Again, though, while this might raise some versions of your credit score, it won’t help them all. Experian Boost will increase your FICO Score 8. Lenders, though, might not use this score when determining if you qualify for a loan. And the UltraFICO score is only being offered now through a small group of lenders as part of a limited pilot phase.

Open a credit-builder loan or secured credit card

Some banks offer credit-builder loans, small loans that you take out for the sole purpose of paying back. The on-time payments will help you build a credit history if you lack one. Just make sure to make your payments on time and that you can afford your monthly payments.

If you lack a credit history, you can also apply for a secured credit card. These act like traditional, unsecured credit cards but with a credit limit tied to a deposit that you make with the bank issuing the card. So, say you deposit $600 with the bank. You’ll then have a secured credit card with a credit limit of $600.

Once you have a secured card, use it to make small charges throughout the month. Pay these charges off on or before your due date and those on-time payments will be reported to the credit bureaus, which will help bump up your credit score.

Limit credit inquiries

Don’t apply for too many credit cards or loans at one time. Every time issuers or lenders do a hard credit inquiry, your credit score takes a small hit, usually about five points. Apply for too many loans or cards at once, and those small hits can add up.

How long does it take to improve your credit score?

How long does it take to boost your credit score? Unfortunately, there’s no single answer. Credit bureau Experian says it could take a few months to several years depending on how damaged your credit score is. There are no quick fixes. You need to commit to a long-term strategy of on-time payments if you want to get your score into the good or excellent range.

Bottom line

A high credit score can make your life easier when you apply for loans and credit cards. Fortunately, building a good credit score is far from impossible. Just follow the simple rules: Make your payments on time each month and pay down your credit card balances and other debt. Do this consistently and your credit score will steadily rise.

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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