How to Increase Credit Score: 7 Proven Strategies

Key takeaways:

• Always check your credit report for errors and updates.
• Keep your payment history spotless by making on-time payments.
• Become an authorized user of good-standing credit cards to build credit safely.

Your credit score can be the defining factor that decides whether you can get the loan you need, negotiate for lower interest rates, rent an apartment, or even be a factor in some job screenings (especially in finance or security). 

In short, it’s an important aspect of your financial well-being and you should know how to keep it high.

We’ll show you how to improve your credit score using seven strategies that are doable and realistic. You’ll understand what affects your score, how to check it, and most importantly, how to make it better starting today.

What Impacts Your Credit Score

1. Payment History

It’s the biggest chunk of the pie, making up about 35% of a FICO score, for example. It shows how often you’ve made on-time payments. If you miss the due date on your payments by 30 days or more, that’s a fast way downhill. Especially if you’re continuously and deliberately late. 

Your payment history lasts for a long time. A single late payment can remain on your credit report for up to seven years. It’s in your best interest to have this record as clean as possible.

2. Credit Utilization

It means how much of your available credit you’re using. You should aim to keep your credit card balance as low as you can: ideally under 30% of your limit. As a result, you’ll be keeping a lower credit utilization rate, and it will help your case significantly.

3. Length of Credit History

As a rule of thumb: the longer, the better. If you’ve had accounts open for years, lenders may see you as more trustworthy. If you have a short credit history, on the other hand, that’s generally okay, just don’t close old accounts without a good reason.

4. Credit Mix

If you can show lenders that you can handle different types of credit without issues, they may see you as a more responsible recipient and give you the loan more easily. It could be car loans, secured cards, mortgages, and more.

Having a good credit mix shows you’re a responsible and trustworthy recipient of the loan, which improves your overall financial stature when asking for credit.

5. New Credit/Hard Inquiries

Each time you apply for credit, it can cause a small drop in your score. Too many hard inquiries in a short time is not a good sign. You should aim to be more picky about applying for new credit.

Common Myths

• Closing a card always helps. On the contrary, it often hurts your credit score.
• Checking your own credit report lowers your score. That’s false.
• Paying off collections erases them instantly, which is false.

Assess Where You Stand

Get Your Credit Reports

Grab your free credit report from each of the three credit bureaus: Experian, Equifax, and TransUnion. You can do it at the AnnualCreditReport website. You’re allowed one from each bureau every week, and checking won’t hurt your credit score.

Review Your Reports for Issues

Go through every credit report line by line. Look for errors, duplicates, accounts that don’t belong to you, and other issues. Mistakes happen more often than you may think, and they can mess with your credit history in the long run.

Identify Quick Wins

If you see anything that can be fixed quickly, like a small balance you can pay off or an account that’s showing late but shouldn’t be, knock them out first. It will help you improve your credit faster than you’d expect.

How to Increase Credit Score: Proven Strategies

There’s no need to try to reinvent the wheel. Utilize these time-tested strategies that have worked for many in the past, and you’ll be on your way to a better credit score.

1. Pay Your Bills on Time

Preventing late payments is the most effective action you can take. While you cannot easily remove a past late payment (unless it’s an error), establishing a perfect record going forward will improve your credit significantly over time.

Set up a calendar for financial obligations to never miss a payment. Better yet, do it every time you get your salary. It’s easy, but it goes a long way.

2. Reduce Credit Utilization

Try to keep your credit utilization under 30%, or even better, under 10%. That means not maxing out your cards and keeping credit card balances low. If possible, ask for a credit limit increase, but don’t spend more after you get it.

3. Keep Old Accounts Open

Don’t close that first credit card you ever got. It adds age to your credit history, which can be a strong factor when the time comes. Even if you don’t use it much, it still helps your score just by being there.

It’s especially true if the card has no annual fee. If it does have a high annual fee, you’ll need to weigh the cost against the potential small, temporary drop in your score from closing it.

4. Limit Hard Inquiries

Don’t go crazy applying for every store card or offer. Every hard check can dip your credit score a little. Space out applications and only apply when it really counts and when you really need it.

5. Add Positive Credit Accounts

Try a secured credit card if you’re rebuilding or just starting out. Or, become an authorized user on someone’s good-standing account. Both can help build credit fast and show lenders a solid track record.

6. Dispute or Remove Incorrect Info

If you find errors in your credit report after doing the free weekly check, file disputes as soon as possible with the credit bureaus. Fixing wrong information can lead to a significant score improvement.

7. Consider Rent or Utility Reporting

Not all bills show up on your credit report, but you can use services that report rent or utility payments. If you’ve got a good record here, it’s another way to add positive data and improve your credit.

How Fast Can Your Score Improve?

How soon you see changes depends on what you fix and how fast you fix it.

Improvements in 30 Days

Paying down credit card balances or fixing an error on your credit card report can come with very fast results. You could see improvements as quickly as next month. Even one on-time payment can make a small difference.

Results in 60-90 Days

Adding a secured credit card, becoming an authorized user of a good-standing credit account, or lowering your utilization to the minimum can take a couple of months to show up. Just be patient, and you’ll see the results of your positive actions.

Long-Term Habits (6+ Months)

If you continue paying bills on time, having a healthy credit mix, and not applying for too much credit every now and again will help your credit score grow steadily over time.

Maintain and Protect Your Credit

After you’ve done all that work, you need to make sure not to let it slide. Keep your score healthy with these habits:

• Use free or paid credit monitoring tools to track your credit report and spot anything off.
• Keep your available credit high by paying off your cards often.
• Watch out for identity theft and freeze your credit if needed.

If you’re struggling with income, go out of your way to talk to lenders early on. They may offer hardship plans that protect your credit history and help you still make on-time payments.

Conclusion

To conclude, make sure you check your credit reports for free every once in a while, start paying everything on time, and keep your utilization low and your available credit high. Stick to these tips and your score will climb over time.

Frequently Asked Questions