Ways to improve your credit score

Navigating the complex world of credit can feel like a daunting task. Understanding how to increase your credit score is a crucial step towards taking control of your finances. A good credit score not only opens the door to better loan terms and interest rates, but also reflects your financial reliability to potential lenders, landlords, and even employers.

Whether you’re starting from scratch, repairing damaged credit, or looking to take your credit from good to excellent, here are 12 ways to improve your credit score.

12 Easy Ways to 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 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 the 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 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 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 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 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.

You may also find negative items in your report that should have been removed due to the passage of time. 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 items that should fall off on their own:

  • 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 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.

If you notice a mistake, start a paper trail. You might need proof of your contact with the creditor or credit agency 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 on 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 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, 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.

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

9. Do NOT close revolving accounts

It may seem counterintuitive, but closing credit card accounts, lines of credit, and other revolving debt can 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 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 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. The credit agencies 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 larger ding on your credit score.

12. Become an Authorized User on Another’s Credit Card

Our final strategy is to become an authorized user on a friend or family member’s credit card. This is a common approach used by parents who add their young adult children as authorized users on a credit card.

According to Experian, an “authorized user is a secondary account holder on a credit card. These users can make purchases, but aren’t ultimately responsible for payment, unlike a joint account holder or a cosigner would be.”

This practice can help those with limited or no credit history get a headstart on building credit. Experian describes this strategy as one that can “benefit you tremendously.” Of the five FICO factors, authorized users can benefit from the cardholder’s payment history and age of accounts.

At the same time, there is some risk involved. If the owner of the account doesn’t pay their card each month on time, it can tank your credit score. There’s also a significant risk if you pay a credit repair company to become an authorized user on a stranger’s account.

Called for-profit piggybacking, Experian warns that this practice is expensive, ethically and legally questionable, requires you to relinquish your personal information, and it may not end up improving your credit.

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.

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.

Next Up: Best Apps to Boost Your Credit Score


  • 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.