Credit scores—which typically range from 300 to 850—play a crucial role in your financial life. Scores above 750 generally open doors to loan approvals and the lowest interest rates available. Scores below 650 can make borrowing more expensive or even difficult to obtain.
Regardless of your current score, there are proven steps you can take to improve it. There are no instant solutions: beware of services promising quick fixes, since many charge fees for dubious credit repair practices. Repairing credit takes time, discipline, and consistent action. This guide outlines practical, reliable strategies to raise and maintain a healthier credit score.
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Read Your Credit Report Carefully
Start by requesting your credit reports from the three major credit reporting agencies and reviewing them in detail. You are entitled to at least one free report per year from each bureau. Credit reports often contain mistakes, so look for errors and report any inaccuracies immediately. Each bureau has up to 30 days to investigate disputes and respond.
Errors are common and can come in many forms: accounts that aren’t yours, wrong addresses, incorrect dates of birth or Social Security numbers, or inaccurate delinquency reporting. One study found errors in a large majority of reports, with many errors significant enough to lower scores. Correcting these mistakes can have a meaningful impact on your credit.
Pay Your Bills on Time
Payment history is the single most important factor in most credit scoring models. A consistent record of on-time payments builds trust with lenders; conversely, late payments and accounts that go to collections can harm your credit for years. If you anticipate a missed payment, contact the creditor before the due date. Many creditors offer one-time accommodations or can work out an arrangement that prevents negative reporting—provided you meet the revised payment date.
To avoid missed payments altogether, set up automatic payments from your bank account for at least the minimum due. As John Ganotis, founder of CreditCardInsider.com, advises, paying bills on time is essential to maintaining and maximizing credit scores.
Understand Credit Utilization
Credit utilization—the percentage of your available credit that you’re using—accounts for a large portion of your score, typically around 30 percent. Lenders prefer to see utilization below 30 percent; many top scorers maintain utilization under 10 percent. Letting utilization climb above 50 percent can dramatically hurt your score.
Keep in mind that utilization measures percentage of available credit, not total debt. For example, moving balances from multiple cards to a single card and closing the others could raise your utilization from 25 percent to 100 percent, damaging your score even though your total debt didn’t increase. Conversely, having a low but nonzero utilization—around 1 percent—is often better than a 0 percent utilization, as it shows active but responsible credit use.
Use Credit Cards Like a Debit Card
To keep balances low without giving up the benefits of credit cards, treat your card as if it were a debit card tied to your checking account. Charge purchases you can immediately repay and pay the balance in full each month to avoid interest. This approach helps maintain a low utilization ratio while still building a positive payment history. If your card earns rewards, you’ll collect points or miles without paying interest.
Open a New Credit Card Account (If You’re Disciplined)
Opening a new credit card can increase your total available credit and lower your utilization percentage—helpful if you keep balances low. Lou Haverty improved his credit by opening new cards and not using them, which increased his available credit while maintaining low usage. This strategy works best for disciplined consumers who won’t be tempted to rack up new balances. If used responsibly, increasing your credit limit can yield a short-term improvement in your score, provided you avoid missed payments or other negative actions.
Pay Your Credit Card Bill More Than Once a Month
Making multiple payments each month can help in two ways: it reduces the chance of a late payment and keeps your reported balances—and thus your utilization—lower throughout the billing cycle. Paying down charges as they occur, even weekly, helps you avoid interest while maintaining a low utilization ratio, which can subtly boost your credit score over time.
Be an Authorized User on a Trusted Account
If someone you trust—such as a spouse or family member—has a long, exemplary credit history, being added as an authorized user on their account can raise your credit score. The account’s history will typically appear on your credit reports, and as long as it remains in good standing, it can positively affect your credit profile. This is one of the few legitimate shortcuts to improve your score quickly when the primary account is well maintained.
Know All of Your Credit Scores
Many people mistakenly think they have only one credit score. In truth, multiple scores exist: different scoring models and variations of the same models are used for mortgages, credit cards, auto loans, and other purposes. Scores can also differ depending on which credit bureau’s data is used. Track and monitor scores and reports from multiple sources so you understand the full picture lenders may see.
Don’t Close Paid-Off Credit Card Accounts
Closing a paid-off account might feel like a clean break, but it can hurt your credit. Closed accounts reduce your total available credit, which can increase your utilization ratio and shorten your average length of credit history—both factors that can lower your score. Keep older accounts open, especially those you’ve held the longest, to preserve credit history and available credit.
Consider a Credit-Builder Loan
Credit-builder loans—often offered by credit unions—are designed to help you build a positive payment record. With these loans, the borrowed principal is held in a savings account or certificate until you pay the loan off. Payments are reported to the three credit bureaus, helping establish or rebuild credit. If you can’t access a credit-builder loan, consider a secured credit card where a deposit secures your credit line; after several on-time payments, many issuers upgrade secured cards to unsecured ones.
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