A credit score demonstrates your financial health based on your credit and debt history. This score shows banks, lenders, and other institutions how you manage your credit and debt. Your credit score can range from 300 to 850; the higher it is, the more responsible you look to lenders and other parties that may run a credit check on you.
If you can boost credit score numbers, you may be able to secure financing for a home, car, or other large purchase. A good credit score may also lower your interest rates on all types of credit lines and reduce down payment requirements by hundreds or thousands of dollars. In some cases, a decent or good credit score could mean the difference between getting the apartment, mortgage, or car loan you really need, or getting rejected.
That’s why it’s so important to monitor your credit score and do what you can to improve it over time before you need to make that big purchase. The good news is, you can start improving your credit at any time.
Here are 9 helpful tips for how to improve your credit score, even if you have little to no credit history.
If you want to fix credit history, you first need to know where you stand. You can do a soft credit inquiry (which won’t impact your credit score) to see your current score and find what’s in your credit history.
You can use free credit check tools through credit reporting agencies like Experian, TransUnion, or Equifax. Or, you can use a tool like Credit Karma that simultaneously pulls all three reports at once, for free and without impacting your score.
Once you pull your score, you can typically see the following information::
- Credit cards, loans, and other debts that make up your financial history
- Credit limits and revolving balances for each account
- The age of each account
- Any negative marks, like late payments or accounts in collections
- How each account impacts your score
- Hard inquiries from no more than two years ago
All this information can tell you which aspects of your credit you should work on first, based on how impactful it is to your score. For example, you might start by handling late or missed payments and then work on paying down revolving balances.
Credit Karma can even give you tips on how to increase your credit score with minimal hassle. Check your credit score regularly using the tool of your choice. You may also consider opting into your bank’s free credit improvement services, if available.
One of the most important things you can do to improve credit score numbers is to pay your bills on time, especially bills for your credit cards, loans, and other lines of credit. One late payment can drop your credit score by more than 50 points, which can take you from good to bad credit in no time.
If you already pay on time, keep at it. If you struggle to make your payments, consider opting into autopay for all of your bills. Be sure to contact the credit card company if you miss a payment right away to see if you can get them to resolve it without reporting it to the credit agency. It’s perhaps the quickest way to fix your credit history.
If you miss multiple payments, the lender or credit card company may send your account to collections, which typically gets reported to credit agencies. Collections can appear on your credit report and negatively impact your credit score.
One of the very first steps toward fixing credit fast is focusing on paying off collections accounts because they have a negative impact on your score. While you do that, make sure to stay on top of other regular payments, like for credit cards and loans not in collections.
It’s very common for people to have revolving debt balances on their credit cards. However, it’s a good rule of thumb to have no more than 30% revolving balance across all of your credit lines each month. Having 30% or less gives you lots of points on your credit report and can help improve your credit score.
However, this means that you would need 70% of your credit limit paid off each month. This may be easy to do if you only spend small amounts on a credit card and pay it off at the end of each month, which can be a real boost for your credit score. But if you typically have more than 30% of your credit line in revolving balance, focus on one card at a time and pay larger payments to get the balance down.
It’s also a good idea to try to pay more than the minimum payment every month to more quickly chip away at the interest and principal. This can help get the revolving balance down and the credit score up.
Your credit score is partially based on how much your total credit line is and how much you owe. So, by increasing your credit limit, you reduce the percentage of debt-to-credit, which can help your score.
It’s often the quickest way to fix credit because you don’t have to pay anything extra. All you have to do is submit a credit line increase request with your card issuer, update your income, and wait for approval (or denial). A credit card company might even automatically provide a credit line increase just for keeping your account in good standing.
You may be asked to update your income every year, but you can also update your income and/or request a credit line increase at any time. For example, if you get a raise or a better-paying job, you can update your income status through your credit card company and submit a credit line increase.
Note that your credit card issuer may not allow you to request an increase if you’ve recently made a request, whether you were accepted or denied.
A debt consolidation loan provides you with a sum of money that you can use to pay off all or part of your debts across multiple lenders and credit cards. Consolidating debt can be a great way to reduce your monthly debt payments and the amount of interest you’re paying.
Aside from helping to fix credit score numbers, it can also make it easier to pay. You’ll only have one payment to deal with, and you’re likely to get a lower interest rate on the loan than you would across multiple credit cards, personal loans, and other debts.
Consider getting a debt consolidation loan through your bank or credit union to get the best options from an institution that knows you and your banking history. There are also private lenders that specialize in debt consolidation loans and balance transfer credit cards you can open to transfer your balances from other credit card accounts to a single account.
There are other credit report models that use factors like your banking, savings, renting, and bill-paying history to compile a more comprehensive credit report. Credit reporting agencies like Experian have instant credit improvement services that allow you to fix your credit score by dozens of points with a click of the button.
Experian’s handy tool can help you calculate your credit history based on the FICO Score 8 model, which can show that your score is actually better based on additional factors used.
Opening a new credit card or getting a consolidation loan can be lifesavers when it comes to fixing credit fast, managing your debt, and increasing your credit score. However, you may want to limit the number of credit applications you submit because they require hard inquiries, which negatively impact your score and can stay on your credit report for up to two years.
Avoid applying for new credit cards, loans, and other types of credit until all hard inquiries are gone. It may also help to wait until you lower your revolving balance and your credit score has increased to a point above where you want it to be.
If your strategy to improve your credit score is to pay down credit cards, then do not close those credit lines once you’ve paid them off. Although it removes the temptation of spending money on your credit line, it could lower your score.
The age of your credit accounts is vital to a healthy credit score. The older your credit history, the better. This shows lenders that you are experienced in managing credit and debt.