How to Improve Your Credit Score

You can improve your credit score by paying down debts, reducing your credit utilization, and making on-time bill payments each month. You can also use WalletHub, which can analyze your credit and tell you exactly how to improve your credit score and even how long it will take.

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Credit improvement isn’t complicated, fortunately. Credit scores rise and fall based on the information in your credit reports. The more positive info and the fewer negative records they contain, the better your credit score will be. We’ll explain the steps to take to improve your credit below.

1. Check Your Credit Report for Errors

One in five consumers have an error in their credit reports, and four out of five who dispute them see changes to their reports afterward, according to the Federal Trade Commission. If you identify a mistake in your credit reports, you’ll need to follow the process for disputing credit-report errors, which is one of the easiest ways to improve your credit score and doesn’t take much time.

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2. Keep Open Accounts in Good Standing

Lenders relay account information to the major credit bureaus every month. And the more accounts, or trade lines, you have in good standing, the more positive information will find its way into your credit reports. This will either water down negative records or help expand limited credit history.

While credit cards and loans both report to the major credit bureaus on a monthly basis, the former are far more accessible to the average consumer. Loans, of course, require repayment of whatever amount you borrow, but a credit card with no annual fee doesn’t have to cost you a thing.

3. Get a Secured Credit Card

If you have bad credit and are unable to get a “regular” credit card, open a secured credit card. Secured credit cards are easier to get than most other credit cards because they require a refundable security deposit, the amount of which usually acts as your spending limit. And they are treated just like any other credit card on your credit report.

You can also increase your spending limit simply by adding to your deposit, which may improve your credit score a bit. When you close your account, you will get your deposit back, minus any outstanding balances and finance charges.

4. Don't Apply for Credit Too Often

Applying for a credit card can lead to a slight dip in your credit score, especially when you apply repeatedly within a short period of time. Each application signifies that you will have less money to pay for every additional credit card or loan you get. And that’s a bad thing from a lender’s perspective. More importantly, applying in bulk tells lenders that you are desperate to borrow, which doesn’t bode well for your ability to pay.

So if you don’t get approved for an unsecured credit card after one or two rejected applications, opt for a secured card instead. Secured credit cards are great for credit improvement because they pretty much offer guaranteed approval.

5. Keep Your Credit Utilization Low

Try to maintain a credit utilization ratio below 30% on each of your credit cards. And if you really want to maximize your credit score, aim for less than 10%. The average credit utilization ratio for someone with a credit score of 800 or higher is 6.5%, according to Experian. A higher ratio hurts your credit score, as it indicates that you are stretched thin financially.

Credit utilization is determined by comparing the balance listed on your monthly statement against your available credit. You can improve it by spending less each month, asking for a higher spending limit or paying your bill multiple times per month to keep your statement balance as low as possible.

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6. Don’t Close Unused Credit Accounts

Lenders, landlords, employers and other decision makers known to perform credit checks are more likely to trust applicants with a long track record of responsible money management. Positive information in your credit reports about recently opened loans and lines of credit will help, but you have to prove yourself capable of making on-time payments and otherwise upholding your end of the borrowing bargain over time. That’s why keeping credit accounts that you’ve had for a long time is a good idea. It can increase the length of your credit history and prove to creditors you have a long track record of being responsible with borrowed money.

If you are worried you may be tempted to overspend and incur unnecessary debt, the right solution isn’t necessarily to close all of your credit cards. Instead, you should keep some of them open yet locked in a drawer (or even cut into pieces) to avoid using them. Before you take such measures, though, contact your credit card companies to make sure they won’t close your accounts if you don’t use them for a long time. If they will, you can set up a small recurring payment to keep each account active. You may also want to consider requesting a smaller credit limit, so you are not tempted to overspend.

7. Build a Long Credit History

A lot of available credit and a long credit history are essential for a great credit score. That’s why it’s unwise to close old accounts, even if you no longer use them. Closing accounts will reduce your available credit, raise your credit utilization ratio and give the impression that you have little credit experience.

You should not, however, pay an annual fee to keep an unused account open. Rather, you should close accounts that are costing you money and use the savings to pay down debt or build an emergency fund.

8. Automate Your Payments

Some people struggle with remembering to pay their credit card bills on time. If you are one of them, sign up for autopay to have your credit card bill payments automatically withdrawn from your bank account. Just make sure you have enough money in your bank account to pay your bills so you don’t incur bank overdraft fees.

Payment history is the most important factor in determining your credit score, so this is a crucial step to take. Setting up automatic payments can ensure you don’t miss a payment and experience a drop in your credit score because of it.

9. Become an Authorized User

One of the best and easiest ways to improve your credit is to get a credit card and use it responsibly. However, it is not always easy to get approved, especially if you have bad credit.

If you have a low credit score, you may want to consider having a family member add you to their credit card account as an authorized user. As they make on-time payments, you’ll have positive information added to your credit report, helping you improve your credit score.

Becoming an authorized user on a family member’s account is also a great way for those under 18 years old to build credit before they can get a credit card account on their own.

10. Get Your Rent Payments Reported to the Credit Bureaus

Unlike mortgage payments, rent payments usually aren’t reported to the credit bureaus. If you always pay your rent on time and you’re not letting the credit bureaus know about it, you’re missing out on an opportunity to boost your credit score. Among Gen Zers and Millennials who’ve reported their rent payments to the credit bureaus, 90% have seen a positive impact on their credit scores, according to TransUnion.

If your landlord does not report your on-time rent payments to the credit bureaus, you can use companies such as Self Rent Reporting, Boom, and RentReporters to take care of it.

11. Report Your Utility Bills to the Credit Bureaus

Utility companies do not typically report your payments to the credit bureaus. However, if you always pay your water, electric, and phone bills on time, you can benefit from having this positive information listed on your credit report.

Companies such as Experian and eCredable will report your utility bills to the credit bureaus, so you can improve your credit score.

12. Improve Your Credit Mix

Credit mix refers to the different types of credit accounts you have, such as credit cards, auto loans, and mortgages. It’s an important ingredient in your credit score. Someone with a mix of credit cards and loans will have a better credit mix than someone with only credit cards.

That said, your credit mix and your credit score will improve over time as you acquire different types of credit to meet your financial needs. You shouldn’t take out unnecessary debt just to improve your credit mix.

13. Don’t Let Unpaid Debt Go to Collections

Unpaid debt that goes to collections, such as some medical bills over $500 or past due credit card bills, will negatively impact your credit score. In fact, a KFF survey found that 35% of adults with medical debt say the debt has had a negative impact on their score.

A delinquent debt that is sent to collections can stay on your credit report for up to seven years. If you are having trouble paying your bills, contact the company sending the bill to see if you can work out a payment plan to avoid the debt becoming delinquent and being sent to collections.

If you already have debt that has gone to collections, pay it off as soon as you can. Once it is paid, it may not be factored into your credit score anymore.

14. Manage Your Credit With WalletHub

It’s important to track your credit score to monitor your progress, and WalletHub lets you see daily updates to your credit score and credit report for free. Regularly reviewing these items allows you to see if the changes you are making are helping to improve your credit score. In addition, you can quickly catch inaccurate or fraudulent information that can damage your credit.

WalletHub also analyzes your credit, provides recommendations to improve your score, and has 24/7 credit monitoring that will notify you of any suspicious activity on your credit report.

15. How Long Does It Take to Improve Your Credit Score?

You may see some credit score improvement within about 30 to 45 days after making positive changes. However, significant credit score improvement can take several years. You can use WalletHub’s credit score simulator to see exactly how long it will take for your credit score to improve and how that might change if you take certain actions, like paying off a loan balance, getting a new credit card, or closing a credit account.

If you notice that your credit score is not improving as quickly as you want it to, there are things you can do to speed up the process. These include:

• Making on-time payments
• Improving your credit mix
• Paying down your debts
• Lowering your credit utilization ratio
• Reviewing and removing inaccurate information on your credit reports

Learn more about how long it takes to improve a credit score.

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Ask the Experts: More Credit-Improvement Tips

A good tip can go a long way. So we asked a panel of experts to share their advice on how people can get a rise out of their credit scores. You can check out their guidance below.

• What is your best piece of advice for someone who wants to improve his or her credit?
• What are the biggest mistakes that people make when trying to improve their credit?
• What is the biggest thing people don’t realize about the credit-improvement process?
• Should you only worry about credit improvement if you have bad credit?