10 Tips To Improve Your Credit Score Today

Your credit score is based on many factors. Click to learn 10 ways to improve your credit score numbers over time.
Infographic of a person trying to improve their credit score

Your credit score is probably one of the most important numbers in your life. After all, it determines if you qualify for a home loan, an auto loan, a credit card, or a personal loan. In some cases, your credit score can even affect your auto insurance rates or prevent you from getting your dream job.

If your score isn’t where you want it, don’t panic. Follow these 10 tips to improve your credit score number today.

1. Make On-time Payments

On-time payments have the biggest impact, as they account for 35% of your FICO scores. If you already have a low score, a single late payment may drop it by 17 to 37 points. For people with high scores, however, a late payment has a much bigger impact—as much as 83 points for someone with a starting score in the 790s.

2. Watch Your Credit Utilization

In financial terms, “credit utilization” refers to the amount of credit you’re using compared to your total credit limit. If you have three accounts with limits of $5,000 each, then your total credit limit is $15,000. Let’s say you spend $500 on one card and $1,500 on the other, a total of $2,000. That would give you a credit utilization ratio of 40% ($2,000 divided by $5,000). Banks, credit card companies, and other creditors like to see utilization ratios below 30%. If yours is higher, pay down as much debt as possible.

3. Check Your Credit Reports Regularly

The National Council on Identity Theft Protection reports that there were 5.7 million reports of identity theft and fraud in 2021, a 21.3% increase from the year before. If someone steals your identity, opens accounts in your name, and doesn’t pay them as agreed, your credit score could take a big hit from all the missed payments.

Even if no one steals your identity, it’s possible for a creditor to make a mistake when reporting information about you to the three major credit bureaus. The Consumer Financial Protection Bureau reports that about 20% of consumers have at least one error on their reports. Check your reports regularly to make sure there are no errors or signs of identity theft that could hurt your score.

Reporting Errors and Identity Theft

If you notice an error, dispute it with the credit bureau or contact the company reporting the incorrect information. For example, if you notice that a company is reporting a 30-day late payment when you’ve always paid on time, you can contact the company and ask a rep to have the inaccurate information removed from your reports.

To report identity theft, call the Federal Trade Commission at (877) 438-4338 or fill out an identity theft report on the IdentityTheft.gov website.

4. Adjust Your Credit Mix

Credit mix refers to the types of credit accounts you have. Depending on your age and financial history, you may have multiple credit cards, an auto loan, a student loan, a mortgage, or some other type of account. Although credit mix isn’t as important as payment history and credit utilization ratio in calculating your scores, it does have an impact. In most cases, lenders like to see that you have several types of accounts, as it shows that you can handle different types of debt in a responsible way.

5. Don’t Apply for Too Many Accounts

Infographic of a man learning about tips to improve your credit score

Almost every time you apply for a credit card or loan, the creditor does a “hard pull” to check your credit history. Having too many inquiries on your reports can hurt your score, so it’s best to apply for credit only if you truly need it, such as when you need a mortgage to buy a home or to finance a new vehicle.

6. Avoid Closing Old Accounts

Another factor used to calculate your credit scores is your average age of accounts. Creditors like to see that you have several years of experience handling credit responsibly. If you close an old account, it reduces your average age of accounts, which may reduce your score. Instead of closing old accounts with $0 balances, keep them open. 

7. Report Your Rent Payments

If you don’t have many open accounts, you may not have enough of a credit history to achieve a high score. One way to overcome this obstacle is to have your rent payments reported to the credit bureaus. Some landlords report rent payments automatically. If yours doesn’t, you can work with a rent payment service to report your payment each month.

8. Resolve Negative Accounts

Late payments, missed payments, repossessions and other negative items stay on your credit reports for at least 7 years. To help your score recover faster, resolve those negative accounts and commit to making future payments on time. If you have a 30-day late payment, pay as soon as possible to prevent the creditor from reporting a 60-day or a 90-day late payment.

If one of your accounts is about to become charged off, contact the creditor and ask if there are any settlement or repayment options. Some companies will reduce your interest rate and stop tacking on late payment fees if you agree to make monthly payments until the debt is paid off. If the account is already in collections, pay it off as soon as possible. Your score won’t rebound right away, but it will go up faster than it would if you left these issues unresolved.

9. Consolidate High-interest Debts

If you have multiple debts, all with different interest rates and payment due dates, it’s easy to lose track of everything and make a late payment. High interest rates also increase the total cost of your debt. If you want to increase your credit score, consider consolidating your high-interest debts into a single loan.

Your score won’t increase immediately, but it may improve if combining everything into one loan prevents you from missing payments. As an added bonus, consolidating at a lower interest rate may help you pay off your debt faster, reducing your credit utilization ratio over time.

10. Request Higher Credit Limits

Once you prove that you can handle credit responsibly, your creditors are probably more willing to increase the limits on your accounts. As long as you don’t make any additional purchases, a higher limit helps you reduce your credit utilization ratio. 

Here’s an example:

Let’s assume you have three accounts, each with a limit of $2,500. That gives you a total credit limit of $7,500. If you’re using $3,000 of that $7,500 limit, your credit utilization ratio is 40%, a bit higher than what creditors like to see. An increase of $2,500 on one card and $1,000 on the other ($3,500 total) would bring your total credit limit to $11,000. 

Now your utilization ratio is 27.3%, all without paying off any of your debt or taking any drastic measures.

You might also be interested in: Beginner’s Guide To Credit Scores – What Goes Into Your Credit Score?

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