What are the best ways to improve your credit score?
The best ways to improve your credit score are to make on-time payments every month, keep your credit utilization low (don’t max out your credit cards), and monitor your credit reports regularly for errors.
A good credit score makes it easier to borrow money when you need it. Knowing how to improve your credit score — and taking the necessary steps to do so — can make it easier when you need to borrow money down the road.
Not sure how to increase your credit score? We’ve compiled some of the best strategies for improving your credit, whether you’re just starting or repairing your credit from recent setbacks.
How are credit scores calculated?
Before you can understand how to improve your credit score, you’ll need a better idea of how credit scores are calculated in the first place.
Lenders use your FICO® score in about 90% of crediting decisions.1 Other scoring companies have different algorithms to calculate your score, but they’re similar enough to FICO’s that your strategy for improving your score should apply no matter which one lenders use.
FICO considers five key factors when calculating your score2:
- Payment history (35% of your score): This measures how well you pay back what you borrow. Missed and late payments will decrease your score; regular on-time payments will raise it.
- Amounts owed (30% of your score): This refers to your credit utilization. Borrowing all the money available to you (for instance, maxing out a credit card) can bring your score down. Try to keep your credit utilization below 30%.
- Length of credit history (15 of your score): Time heals everything, including your credit score. As your credit history ages – and you’ve demonstrated over the years that you’re a responsible borrower – you can expect your score to improve.
- Credit mix (10% of your score): Having a healthy mix of different types of credit – mortgages, car loans, student loans, credit cards – can be helpful for your credit score.
- New credit (10% of your score): If you open multiple lines of credit in a short timeframe, your score may temporarily go down. Be strategic about what accounts you open – and when.
7 best ways to improve your credit score
Are you wondering how to increase your credit score? We’ve put together seven helpful strategies that can lead to improvements over time.
1. Automate and make bill payments on time
Payment history accounts for the largest share of your credit score. Make on-time bill payments your top financial priority if you’re improving your credit score.
Here are some ways to ensure your accounts stay up-to-date and in good standing:
- Set up automatic payments: Setting up automatic payments for the minimum amount due every month ensures you won’t miss a payment. Late payments can stay on your credit report for up to seven years.3
- Address missed payments: If you miss a payment, pay it as soon as you can. Then call the credit card company and ask if they’ll consider not reporting the missed payment to the credit bureaus.
- Stay on top of other accounts: Keep close tabs on other accounts, even if they don’t usually appear on your credit reports, such as gym memberships and subscription services. If you don’t keep up with payments, the account could be sent to collections – and that will show up on your credit report.
2. Pay balances strategically
When determining how to boost your credit score, you can try one of several popular debt payment strategies, including the 15/3 method, the debt snowball method, and the debt avalanche method.
- 15/3 credit card payment strategy: You’ll make two payments each month – one 15 days before the credit card statement date and another three days before. This helps keep your credit utilization down ahead of the statement date when creditors typically report your utilization to the bureaus.
- Debt snowball method: This strategy can help when juggling multiple debts. You’ll make minimum payments on all your debts, but then you’ll throw all your extra money at the smallest debt until you’ve knocked it out. Then you’ll focus on the next smallest and so on until you’re tackling your largest debt. The early victories can boost your morale and keep you on track to pay off your debt.
- Debt avalanche method: The debt avalanche method may not have little victories up front, but it can save you money in the long run. This strategy focuses on wiping out the debt with the highest interest rate first, then working your way down to the lowest-interest debt.
These aren’t the only three strategies for paying off debt but are among the most popular. What’s most important is finding a system that works for you – and sticking to it.
3. Increase your credit limits
Paying down your balances can free up available credit and improve your credit utilization. But debt payoff takes time.
Bumping up your credit card limits is a faster way to decrease your credit utilization. Your utilization goes down as your credit limit goes up but your balance stays the same. This can improve your credit score significantly.
So how can you increase your credit limits? Just ask!
If you land a new job, get a promotion, or add more income through a side gig, ask your credit card issuers about a higher limit. You can also do this after several years of positive credit experience.
Chime Tip: While increasing your credit limit can be helpful, you can still work on your credit utilization by simply spending less with your credit card. A good rule of thumb is to keep your credit card utilization at 30% max.
For example, if your credit limit is $1,000, your total balance shouldn’t exceed $300 at any given time. If you hit $300, pay it off – even if the balance isn’t due yet – before using the card again.
4. Sign up for free credit monitoring
Credit monitoring services can help you keep tabs on your credit history as you work toward improving your score.
Companies like Credit Karma and Credit Sesame offer this service for free. Chime members can monitor their FICO score in the Chime app.
You can also request a free credit report every 12 months from the three major credit bureaus.
Monitoring your credit allows you to spot and dispute errors and potential fraud. While credit monitoring services can’t prevent identity theft, they can keep you informed to take action if you notice something is wrong.
And don’t worry: checking your credit score doesn’t lower it.
5. Dispute credit report errors
Credit bureaus collect your information from companies where you have open accounts, such as banks, credit card issuers, retailers, car and mortgage lenders, and even utility companies. These bureaus do their best to get it right, but everyone makes mistakes.
34% of people have an error on their credit report.4 Some errors – like incorrectly reported balances or inaccurate gaps in your payment history – can hurt your score significantly.
Find an error on your credit report? Follow that credit bureau’s steps for filing a dispute (and check your other reports to see if the same error appears there). Credit bureaus have 30 days to investigate disputes after you file.5
Still need help? The Federal Trade Commission has a guide for disputing credit report errors.
6. Don’t close old accounts
If you’ve successfully paid off one or more of your credit cards, you’ve earned the right to a victory dance.
But don’t close the account when you’re done dancing. In fact, keep it open for as long as you can — just don’t spend with the account.
Why? The length of your credit history and the ages of your different accounts affect your credit score. Typically a longer credit history results in a higher score.
Plus, leaving a card open – and rarely using it – helps lower your credit utilization and boost your score.
Pro Tip: Some credit card companies may close cards due to inactivity. Use your old credit card once or twice a year for something small, like a pack of gum, then pay it off immediately to avoid interest.
7. Use a secured credit card
Establishing and building credit can feel like a catch-22 when you’re just getting started.
After all, responsible credit card management is one of the easiest ways to improve your credit score. But you often need a decent credit score to qualify for a credit card to begin with.
So how can you get a credit card to start building your credit? A secured credit card might be the right path. This type of card requires you to make a cash deposit that serves as collateral for the account. This reduces the risk for the credit card company, which means people with low or no credit can usually qualify.
Use this credit card responsibly for several months: Make on-time payments and keep the utilization low. Over time, your score should improve, and you may be able to qualify for a credit card with a higher limit and no security deposit.
Why improving your credit score matters
Having a good credit score makes it easier to borrow money when you need it. That could mean getting a mortgage or car loan, taking out a personal loan to cover an emergency, and earning some cash back or travel rewards.
Actively working on your credit score means you’ll have access to credit when you need it and at more affordable rates. Check out our guide to credit score ranges to understand what your current score means – and how improving your score might make future borrowing a little easier.
Why should I inquire about new credit or loans within the same month?
Applying for new credit results in a hard inquiry on your credit report – and multiple hard inquiries can lower your credit score and send red flags to creditors. By shopping for loans and new lines of credit within 30 days of each other, you usually avoid multiple credit hits.
Does opening new accounts affect my credit score?
Opening a new credit account can cause your credit score to decrease a bit. When you first apply for the account, it will result in a hard inquiry on your credit report, which will temporarily lower your score.
But don’t worry: It’s not a huge impact, and your score can bounce back quickly – especially if you responsibly manage the new account.
How fast can I raise my credit score?
Wondering how to raise your credit score quickly? Paying bills on time and using less of your available credit limit on cards can potentially raise your credit in as little as 30 days.6
However, due to reporting lags, it could take a few months for credit reports to reflect your work.
How can I raise my credit score in 30 days?
You can raise your credit score in 30 days by making on-time payments for all your accounts and reducing your credit utilization. You can decrease your utilization by:
- Spending less with your credit card
- Increasing your credit limits
- Making extra payments on outstanding debts
What is the fastest way to boost my credit score?
You may be able to boost your credit score quickly by requesting a credit limit increase – but not spending up to this new limit. This will lower your credit utilization, which can increase your score.
You can also improve your credit score by making larger payments on existing debt. This also reduces your credit utilization.
Improving your credit score is not a sprint. Improving your score takes time. Pay your bills on time every month, be strategic when opening new accounts, and never borrow more than you need. Over time, your score should improve.
What are 3 ways to increase your credit score?
Wondering how to improve your credit score? Three easy strategies include:
- Making on-time payments for all your bills. Set up automatic payments if you’re worried you’ll miss any.
- Keep your credit utilization low. Never spend more than 30% of your credit card limit, and pay your credit card bill in full every month. Keeping your credit utilization low is a surefire way to improve your credit score.
- Review your credit reports. Errors on your credit report could be bringing your score down. Review yours regularly to ensure all the information is correct and dispute errors promptly.