A good credit score can save you thousands of dollars in lower interest rates. To help boost your FICO score, here’s our guide on how to improve your credit score.

If owning a house is the modern American dream, most Americans wouldn’t be able to achieve this dream without the help of the finance industry. As a result, our finances–and our lifestyles–rely heavily on credit scores. Improving these scores not only opens the door to opportunities but can also save us a lot of money in the end.

Why Your Credit Score It Matters

A credit score determines the types of interest rates we receive on loans. Because of this, a good credit score could save tens to hundreds of thousands of dollars throughout someone’s life. One estimate placed the value of a good credit score at $83,770!

Sure, it’s possible to live without ever using a financial service that requires a good credit score. A full cash-based life is not entirely out of the question. For most, though, it is simply unrealistic.

Because so many people need a good credit score to maintain the best financial condition, choices and actions that increase that credit score are incredibly important. Luckily, it’s not all that “hard” to do. It simply takes time and a concerted effort.

Let’s talk about a few of the first steps you should take when attempting to rebuild or improve your credit score.

1. Get your FICO Credit Score

The first step is to know your credit score. The saying goes that you “can’t improve what you can’t measure.” And that’s never more true than with your finances.

The good news is that you can get your FICO credit score for free. You do have to sign up for a 30-day trial, but you can easily cancel the service before the trial ends if you want.

Don’t want to use a service that might require payment? That’s doable. Services like Quizzle, Credit Karma, and Credit Sesame give you a free credit score estimate. (Just keep in mind that these are estimates, even if they may be fairly accurate.)

Another option is to check with your current credit card provider. Many of today’s credit card companies provide a free copy of your credit history and credit score every month.

The bottom line here is that you should have some idea of where you stand with your credit score. With all the free options available, there’s no reason not to!

2. Get a free copy of your credit report

Step two is to get a free copy of your credit report. By federal law, the three major credit reporting agencies must provide each consumer with a free copy of their credit report every year. This is the starting point for improving your score. And remember, you can get your free copy at AnnualCreditReport.com.

You can swing this in one of two ways. One option is to get all three reports at the same time. Then you can compare them to be sure they all have accurate information. (See steps three and four!) Or you can pull one report every four months. This lets you keep an eye on your credit history without paying through the nose for frequent reports.

Either option is fine. Again, it’s most important that you have some idea of what information appears in your credit history.

3. Review your credit report for accounts that aren’t yours

The first thing to do when reviewing your credit report is to make sure the identifying information about you is accurate and that listed accounts belong to you.

If you see an account you don’t recognize, try to get to the bottom of it. Start by reviewing your personal records of outstanding debts and accounts. Sometimes creditors have a different official name than the one they present to the public. So an account you don’t recognize could be one you actually opened but just don’t recognize immediately.

If that’s not the case, though, it could be that you’ve fallen prey to identity theft. In this case, you’ll need to go through the steps of reporting the theft. Simply having fraudulent accounts removed from your credit history could significantly boost your score.

4. Review your credit report for errors

Even if all of the reported accounts belong to you, they may contain errors. For example, a creditor may have reported a delinquent payment that was, in fact, paid on time or repaid. If you paid a creditor in full after some time of missed payments, it’s not unusual for the creditor to have failed to report your payment to the credit bureaus.

Or you may show outstanding collections accounts that are actually paid off. Collections accounts on your credit history aren’t good, either way. But paid-off accounts are much better than those with an outstanding balance.

If you notice a mistake, start a paper trail. You might need proof of your contact to get the situation resolved quickly.

5. Review your inquiries for errors

When you apply for most credit, the creditor will pull your credit report as part of its decision whether to extend credit and on what terms. These inquiries are one factor in determining your credit score.

The theory goes that if you have a lot of recent inquiries to your credit report, you may be applying for credit to address a financial crisis. As a result, inquiries will lower your credit score. What you want to make sure is that you authorized each of the inquiries that you find in your credit report. If inquiries are showing up when you didn’t actually apply for credit, contact the credit reporting bureau to report the mistake.

Related: Visit CreditKarma to see your free credit score.

6. Dispute any errors you find

Having carefully reviewed your credit report, the next step is to dispute any errors you find. Having successfully disputed errors in the past, I suggest taking two approaches.

First, contact the creditor directly to dispute the error. Particularly if you still have an ongoing relationship with the creditor, they generally are willing to look into the issue. Second, dispute the error directly with the credit reporting agency. By law they are required to investigate any errors you bring to their attention and respond to you within 30 days.

Filing a dispute with a credit bureau is much easier than it may seem, and each of the three major credit reporting agencies has a section of their website (Experian | TransUnion | Equifax) that will help you dispute an error online.

7. Pay your bills on time

Having examined your credit report closely and disputed any errors, it’s now time to turn our attention to money management. The first rule of credit score health is to pay your bills on time.

Even one late payment can significantly lower your credit score. And the higher your score is to begin with, the more impact a late payment will have. Note that most creditors will not report a late payment until it’s 30 days past due. Still, being even one day late can result in penalty fees, increased interest rates, and even closed accounts.

The best way to avoid late payments is to automate your finances. Sign up for automatic bill pay whenever you can. Or if you live with a variable income, try to get a month ahead on your payments. That way if income doesn’t hit your bank account at the right time, you have built in extra time to pay your bills.

8. Pay down your debt

This may fall into the “easier said than done” category. But it will help improve your credit score. Your overall amount of debt plays into your FICO score. And revolving debt is particularly important. Carrying high balances on credit cards relative to your available credit will tank your score quickly.

In fact, paying down revolving debt, like credit card debt or even a HELOC, maybe the quickest way to improve your credit score. And since paying off debt is also a way to get in control of your finances, it’s generally an excellent strategy.

9. Do NOT close revolving accounts

It may seem counter intuitive, but closing credit card accounts, lines of credit, and other revolving debt can actually lower your credit score. One of the main factors in your score, mentioned above, is your debt-to-limit ratio. This is how much credit you’re using versus how much credit you have available.

Closing a credit card will lower your available credit. This will increase your credit utilization ratio, even if you don’t go into any more debt. Plus, if you close an older account, it may lower the average age of your accounts. This is a less important piece of your credit score, but it’s still a part of the equation.

If you’re struggling with overspending, try another strategy. Consider cutting up your cards and unlinking them from all of your online accounts. Or use only one card with a low limit for your everyday grocery and gas shopping. Then, pay it off as soon as you use it. This keeps your cards active, but lets you avoid going into more long-term credit card debt.

Read more: How to Cancel a Credit Card Without Hurting Your Credit Score

10. Don’t max out a credit card or line of credit

Another factor in the credit score formula is whether you use most or all of the available credit on any given account. The theory is that if you max out an account, it may reflect some financial difficulties that could increase your risk of default. And this is true even if you pay off the account in full every month.

Even if you pay off a card at the end of every billing period, that may not reflect on your credit report. Say your American Express account gets reported to Experian on the 15th of every month. You’ve used your card every day for the first part of the month, so you’re carrying a hefty balance. You pay off the balance on the 28th–two days before that month’s bill is even due.

But, still, your high balance was reported to Experian on the 15th. Not good.

The best policy here is to never charge more than 30 percent of a card’s limit on any individual card. And also don’t use more than 30 percent of your total credit limit at any given time.

Sometimes it makes sense to make a large purchase on your credit card. For instance, you might book a $5,000 vacation cruise on your credit card to get the automatic travel insurance and other perks. That’s great. Just pay it off as soon as the transaction is processed to avoid having that large balance show up on your credit report.

11. Apply for new credit only if you must

As noted earlier, inquiries to your credit report will lower your score. Every time you apply for a credit, the creditor in question looks at your credit score. The credit bureaus record this inquiry, and it dings your score. So to avoid these inquiries, apply for new credit only if you must.

One thing to keep in mind is rate shopping. Credit card companies understand that smart consumers shop around for credit in certain situations. For instance, if you’re getting a mortgage, you should check with multiple lenders to get the best terms.

So FICO gives consumers between 14 and 45 days to rate shop. Which end of the spectrum depends on which particular FICO score (there are more than 10!) a potential lender pulls. Your best bet is to do your rate shopping within two weeks. So set a deadline to put in all of your mortgage, car loan, or student loan applications within two weeks to avoid multiple hard pulls and a ding on your credit score.

Improving your credit score can have many positive effects on your finances. The simple steps described above will help you to improve your score, and you may seem results very quickly. Of course, if you are recovering from a financial meltdown, it will take time. But with patience and sound financial management, you should see your score start to improve.

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1. Look for Mistakes in Your Credit Report

The fastest (and often, biggest) fix for improving your credit score is something most consumers have never done: simply correcting errors.

Credit scores are driven by credit reports. Credit reports are driven by the information that lenders and card issuers send them. More often than one might expect, lenders have incorrect information. Credit bureaus make mistakes, as well.

There is little excuse for not checking all three credit reports at least once a year. In fact, you’re entitled to one from each bureau–Experian, Equifax, and Transunion–every twelve months, free of charge.

Be sure to obtain these and pick through them. Pay attention to high balances, late payment marks, and other derogatory reports. If something doesn’t seem correct or match your records, give them a call.

Correcting a problem on a credit report can result in a credit score increase of from ten to a hundred points or more.

How to Do It

Once each year, visit AnnualCreditReport.com to get your three free credit reports. Don’t Google “free credit report.” You’ll get a slew of solicitous results, many of which are scams or paid sites. AnnualCreditReport.com is the only government-approved site for your yearly, complimentary reports.

Rather than getting all three at the same time, you can spread this out so that you check a different report every four months. However, if you’re looking for an immediate change and you haven’t looked in the past year, it doesn’t hurt to get it all done at once.

After you retrieve your credit reports and avoid the gratuitous up-selling, check every piece of data on each report for accuracy. Any problem with your personal data can be corrected easily. If there’s a negative item on your credit report that does not apply to you, you have a few options.

You can call the lender directly, especially if it’s an account that’s still open, and let them know that there is an error. Be ready to provide any sort of proof that you may have (statements, cleared checks, etc). If they are unable or unwilling to help, though, you will need to file a dispute with the reporting bureau.

Reporting an error on your credit with each bureau is a much more simplified process than it was just a few years ago. You can either send a letter through the mail or go online and open a dispute. Whether online or through snail mail, include any documentation you have to support your claim.

The credit bureau will then reach out to the creditor in question, and they’ll have thirty days to respond.

Lingering Reports

Some negative items are supposed to drop off your credit report after a certain number of years, automatically. Sometimes, though, the bureaus overlook this on individual credit reports until someone brings it to their attention. It pays to be vigilant in this situation.

Here are a few of the common reports that should fall off on their own. Be sure to check your report and confirm that your own negative items did indeed disappear as planned.

  • Old bankruptcies must be removed from your credit report after ten years.
  • Lawsuits and judgments must be removed after seven years, even if you haven’t fulfilled the court order.
  • Paid tax liens remain for seven years, and unpaid liens remain for fifteen.
  • If you are divorced and your spouse incurred debt when you weren’t married–either before you were married or after your divorce–it should not appear on your report.

If any of the above situations apply to you, and the time period for which the items need to remain on the report has passed, contact the bureau as soon as possible. They will have the negative items removed.

The best part? Your credit scores should improve almost immediately.

Related: Best Credit Score Apps

2. Work On the Big Picture

Keep in mind there isn’t just one credit score. Each bureau has their own formulas and uses their own data, and there are several varieties published by each bureau.

FICO8 and FICO9 are the most popular credit scores. When lenders, landlords, employers, and anyone else checking your credit your history, though, they could be looking at any one of several sets of data.

Differences in these histories can lead to different credit scores. You never really know which version they are going to pull, so it pays to work on your overall credit picture. While there are differences in scale and exact score formula, the same approaches to the use of money and credit can improve your score across all brands.

You can maintain a good credit score by developing a long history of responsible credit use, not using too much credit, and having a good mix of types of credit. Here are some specific tips:

Pay your bills on time

Paying bills late can negatively affect your score in a big way. Plus, those negative reports will stay on your credit for a whole seven years. Avoiding late payments altogether is imperative for building up (or repairing) your credit score.

Unpaid bills can begin to affect your credit immediately. Debts that go to collections will stay on your report for seven years, even if you then go back and pay them off. Debt payments that are overdue by 30, 60, or 90 days will be noted as such, with each notation having an increasingly negative effect on your score.

Bottom line: pay bills on time, every time and even consider using auto-pay so you never forget. This will also save you wasted money on late fees!

Keep credit card balances low

The ratio of your debt to your available lines of credit affects your score. The higher the ratio, the higher your effect on your score. This is why it’s important to hold as little debt as possible from month-to-month, so you can reduce this ratio and improve your credit.

Keep this in mind if you choose to consolidate multiple credit cards into fewer. This can be done by either by closing old, unused cards or transferring balances and then closing the paid-off card. Doing so can result in the same level of debt but a lower level of available credit, which essentially increases that debt-to-credit ratio… which would actually affect your score negatively!

Don’t open unnecessary accounts

Opening new credit card accounts can be tempting; believe me, I know. Being at a sales counter in a store and being offered a 15 or 20% discount “just for applying” for a store credit card can be enticing. After all, that can be a lot of money saved.

Of course, there is downside to this. Opening too many new credit card accounts will lower your credit score, thanks to both hard inquiries and your average age of accounts. Oh, and if you open (or apply for) too many accounts in a short period of time, you can begin to look like a risk to creditors.

Be prudent when opening new accounts. Make sure it’s a card you need and has great benefits, and don’t open too many over a short span of time.

Manage your credit cards responsibly

Use cards properly by paying off the balances quickly and taking care of installment loans. Doing this builds up credit history, and the longer you’re responsible with you’re accounts, the higher your credit score rises.

Banks will see someone with a favorable credit history as less risk, compared to an individual with no history.  Take advantage of great balance transfer credit cards if you’re having trouble paying down your credit card debt.

Closing an account doesn’t help

If you made mistakes in the past, they won’t go away from the credit report simply by closing the account. Some items can stay on the report (and be factored into your score) long after you’ve reformed your ways.

Keep your oldest credit history

The age of your credit history is an important factor in your score. So, even if you don’t like the terms on a certain credit card, it may not be a good idea to cancel it.

If you have a credit card with poor terms, that doesn’t earn you rewards, or for a store where you no longer shop, keep it open. There’s no need to continue using the card, but it’s not worth the impact on your credit to close it. Some cards require you to use it ever-so-often or they’ll automatically close the account for you; be sure to ask about their own policies.

There are some cards that may be worth closing, though. Say the card has an annual fee and doesn’t have enough benefits to make up for that expense. In that case, you should call customer service and ask to either downgrade the card to a different product (if available) or close the account to avoid the fee.

Be careful, though, especially when closing older accounts. Doing so will have an even greater impact on your credit than closing a newer account, due to the average age of accounts growing shorter.

3. Be Patient

Improving your credit takes time. Aside from fixing errors, there is no “quick fix” to building a good score.

However, if you work hard at decreasing (or eliminating debt), avoiding excessive inquiries, and always paying bills on time, your score will slowly climb. The longer your accounts are open and in good standing, the higher your credit will rise. Your limits will likely increase, as well, which will further improve your score.

Before you know it, you’ll not only have great financial habits established, but a healthy credit score to match.


  • Abby Hayes

    Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.