Improve Your Credit Score

Improve Your Credit Score | 7 Tips on How to Improve Your Credit Score
  • Review the steps to take to raise your credit score.
  • Understand how your credit score is calculated.
  • Pay your bills on time and manage your credit utilization.

Learn 7 Techniques to Improve Your Credit Score

Don't take your credit score and credit history for granted. A small credit problem can grow into a bigger one. Bad credit causes financial harm, but also can affect getting a job, the rates you pay on insurance, or being able to rent a place to live. Avoid serious harm from credit mistakes tehat can follow you for many years. If your credit is not as strong as you want it to be, here are seven techniques to improve your credit rating.

1. Establish Credit History

Your credit rating is established partially on your credit history. Your credit history is based on the information that your creditors have reported to credit bureaus, including the history of how you handled your credit cards, loans, and even some utility bills. If you have little to no history, the creditors are leery about offering you credit. They do not have enough information from your past to view you as a good credit risk, so your credit will be established at a lower rate. If you want to build your credit, get a credit card, charge a few things, and pay off the majority of the balance. Financial experts recommend keeping your account balances less than 30% of your available credit. It shows that you have the ability to pay back your debt, without letting it grow out of control.

If you have no, very limited, or a bad credit history, you may be turned down when you apply for credit. If so, consider applying for a secured credit card.

2. Secured Credit Card

Secured credit cards require you to deposit cash in an account with the credit card bank and the credit line available on the card is equal to the amount of cash you have on deposit, less any fee that the issuer charges you to establish the account. Make sure that your secured card issuer reports your card activity to the credit bureaus.

3. Co-signer

If you can find someone willing to co-sign for you on a loan or credit application and the account is kept in good standing, this will help your credit score improve. It can be hard to find a co-signer; because, if you default on a payment, the co-signer is fully responsible for the debt and any fees and interest tacked on and the co-signer’s credit will suffer, too.

4. Make Payments on Time

If you pay your bills late, you are not only incurring late fees and exposing yourself to a hike in your interest rates, but you are also damaging your credit. If you miss a payment entirely or are 30 days late on a bill, your credit will suffer serious harm. Your payment history, even for minor items such as utilities and cable television, can be reported to the various credit bureaus. Any missed or late payments are recorded and reported on your credit report. If you want to build and maintain your credit rating, pay your bills on time and do not miss any payments. If you have missed payments in the past, get back on track. Your recent payment history counts more than ancient history, so do not let a past problem be an excuse to let the problem continue to reoccur.

5. Pay Off Your Debt

If you have debt, pay it off. Do not transfer your debt from one credit card to another to card, even when lowering your interest rate, without making a concerted effort to pay down the debt. Start budgeting to pay off your debt. Pay off that credit card and your other debt payments until nothing remains. The longer you continue to carry debt on which you are paying interest, the more you will end up spending to pay it off.

6. Control Your Credit Utilization

The amount debt you carry compared to the maximum size of the credit lines you have been granted results in how creditors view your credit utilization.  Credit utilization is measured at the close date (typically monthly) and then reported to the bureaus. A reporting period is typically 90 days, so a charge and then quick payoff should not hurt your credit utilization.

FICO, the most often-used credit scoring system, measures utilization at the individual card level (and possibly in aggregate). Be aware that if you have an individual credit line or credit card that has a balance that is more than 30% of the credit limit, this could negatively impact you. If you have a maxed out card, this will certainly hurt your credit score. You should examine all your credit lines and work to pay down each one so that it is not more than 30% of the maximum credit line you were issued.

7. Don’t Apply For or Take on Too Many Credit Cards

Having and using a credit card wisely will improve your credit rating. A standard guideline is to maintain least three active trade lines in good standing. A trade line is credit industry jargon for a type of account, such as a department store credit card, a card issued by a oil company, a student loan, and so on. Ideally, they should be a mix of different types of accounts, such as a home mortgage, car loans, bank credit cards, store credit cards, unsecured personal loans, or loans for furniture or electronics.

However, if you constantly apply for new credit cards, it can hurt your rating, especially if you repeatedly are turned down for them. Applying for too many credit cards, in a way, shows that you do not have enough capital to afford your cost of living. If you are getting turned down by creditors, that is an indication that your credit standing just is not up to par. Other creditors will weigh these rejections against you.


Your credit score can have a large impact on your ability to achieve your life goals. Your credit rating dictates the interest rate you will receive on loans and whether or not you qualify for a loan or additional credit. Most Americans plan to buy a home or car sometime. If you have bad credit and do not take steps to improve it, you will pay the price, by paying higher interest and by having your choices limited. A credit problem that is left to grow will severely harm your ability to purchase a home, a car, or even get basic cable television or a cell phone.

If you want to improve your credit score, make sure to take the necessary steps. Pay off all debts, control your credit utilization, have a mixture of accounts, and pay everything on time. Most anyone, even someone who has just completed a bankruptcy, can build a good credit score in a couple of years by taking the proper steps.

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Comments (29)

Kell K.
Plantation, FL  |  February 23, 2014
Would it be possible to skip the collection agencies and pay the bank the debt to which you owe?
February 24, 2014

A creditor will either sell a collection account to a collection agent, or will hire a collection agent to collect an account. When a creditor sells an account, it has no rights to the account anymore. If the consumer pays the creditor, it must turn this money over to the collection agent who owns the account. The opposite is true if the collection agent is a hired gun, so to speak.

A consumer does not know if the collection agent owns all rights to their account, or is merely a hired hand. The collection agent is not required to disclose that information. Indeed, the front-line collection agent a consumer talks to may not honestly know if asked.
Deborah S.
Peoria, IL  |  December 10, 2013
Will my husband's medical bills affect me? I am the one who has the insurance. I am not sure if the collection agency is just trying to scare me into paying. Will it affect my credit score?
December 12, 2013
I cannot give you a quick yes or no answer to your questions. A married person has liability for his or her spouse's medical bills if:
  • The non-treated spouse signed a guarantor agreement with the medical service provider, or
  • The treated-spouse's state of residence has a doctrine of necessaries rule (also called doctrine of necessities), which requires spouses to pay for each other's medical care, or
  • The treated spouse lives in a community property state where the presumption is that debts incurred by one spouse during marriage are owed by both spouses

If you have liability for your spouse's medical debt, then the creditor(s) can report this information to the consumer credit reporting agencies, and it will appear on your credit reports.

E P.
B/o Lansdowne, PA  |  July 20, 2013
This post is very informative! I hope you can assist. My credit is in the mid to high 500s. I have two accounts in collections within the past two years. One is a phone bill which I paid in full for $300. The other is a store card that had a balance high balance of $3,400. I have set up arrangements with the collection agency and have since decreased the store card debt to $1,700. What recourse do I have for possibly fixing these charge-offs? It is possible to get a pay-for-delete agreement at this stage in the game? Can I dispute the phone bill even though its been paid in full? Please advise. I'm young and I made some mistakes, but I don't want seven years of bad luck :( Thanks so much.
July 22, 2013
The damage to your score took place when the accounts went severely delinquent. Disputing accurate information is not an effective way to get it off your credit report. There really is no surefire way to do so, aside from time.

Your main focus should be on building positive information on your credit report. That is what will boost your score. You need to have active accounts that you use and pay responsibly. If you don't have strong enough credit for anyone to offer you a credit card, start with a secured credit card.
Jaosn S.
Wartburg, TN  |  June 20, 2013
I actually have 6 total collections account...4 are being deleted and 2 are paid in full. Also a bankrupcy from 10 plus years ago.. I going to get a secured score currenty stand around 515...Can I expect an improvement and if so how much?
June 20, 2013
It is not clear to me if you have any other accounts in good standing, such as a car payment, a mortgage, or a student loan, for example. If you are starting completely from scratch, with no positive accounts, but beginning to build by obtaining a secured credit card, then I think that you can only hope for a quite slow and steady rise. I recommend trying to establish a few positive tradelines, so the recovery is faster. However, given the damage that your score took, I think it will take 18-24 months to build your credit into the very good to excellent range.

I think it would be interesting and informative for you to track your progress and share how things develop.
John W.
Glen Burnie, MD  |  February 16, 2013
My fiancé has just been contacted by a CA for a credit card debt from BoA from 5 years ago that was charged off. She is still within the SOL and we plan on settling the debt but I have a question. The debt is currently reported on her CR as a CO from the OC and is currently in collections with a CA. When we settle, will the debt continue to be reported by the OC and CA for another 7-1/2 years? Since it has been CO'd by the OC will it still be removed from them in 3 years and reset the timeline for the CA for another 7-1/2 years? Or will the debt just be changed to reflect a status of "settled" and still be removed from her CR in about 3 years from both the CA and the OC?
February 16, 2013
Under the Fair Credit Reporting Act, the 7-year clock starts at the date of first delinquency. Subsequent events, including;
  • the date the original creditor charges off the debt,
  • the date the original creditor assigns the debt to a collection agent,
  • the date collection agent A sells the collection account to collection agent B, and
  • the date the debt is resolved/settled

are irrelevant to the 7-year clock.

Review one of your credit reports. What date did Bank of America report as the date of first delinquency? Is that accurate? If so, then add 7 years to that date. Under the FCRA, that is when the derogatory will be removed from your fiance's credit report.

If Bank of America reports an inaccurate date of first delinquency, then dispute the error with any of the big-three consumer credit reporting agencies that published the error.

Alma C.
Victorville, CA  |  March 30, 2012
Thank you so much for this website! My husband had multiple credit card accounts go into collections. He was able to settle with the CA's except for one account. It's a Capital One account that has not seen a payment in over 2 years. He periodically receives mail from both a collection agency representing Capital One and Capital One themselves. We tried negotiating with CO last year, but they were not willing to help us out. Now, we are saving for a home and would love to have this account paid. Capital One is now sending statements that say they will start accepting small payments to get back on track. We are more than willing to do this. Will this help hubby's credit score? What other steps do you recommend taking to crank up his score... it's in the mid-500's. Any help would be great appreciated.
April 05, 2012
How paying older delinquent accounts affects a person's credit score is an issue of minor controversy in the credit report world. One school of thought is that by paying an older debt, the FICO scoring software re-ages the debt to current status, which causes the person's credit score to fall. (The implication is, "Do not pay older debts if you want to boost your credit score.")

Another school of thought is FICO does not re-age the debt, and that by paying the debt the person lowers their credit utilization ratio, which will lead to an increase in the person's score. (The implication is, "Pay your debts to increase your score.")

Why is this so mysterious? FICO and VantageScore algorithms are secret and intricate, and the credit scores these algorithms generate are the result of weighing and measuring many variables. A person's credit score can vary by 10 points in a month for no clear reason. One action may cause a FICO score to go up, and the same person's VantageScore to go down.

In general, home loan lenders like to see tidy credit histories. If you have the opportunity to clean up this mess, do so. It may not help your score immediately, but will make your report less of an issue later when you sit across from the loan officer.
Rachel W.
East Troy, WI  |  January 29, 2012
my husband and i went through credit counseling. All debts are paid off... my credit was hurt the worst since every card was in my name except for one. I've gotten a new card pay it off every month just wodering how long until we could possibly get a house this next year 2012 we plan on saving up for a down payment and looking in 2013 just wondering if a house will not be in the plans yet??
January 29, 2012
Rachel, how fast your credit score will rebound depends in large part on what other accounts you have that were not enrolled in the credit counseling program. For instance, if you have a car payment and student loans that are in good standing, then your score will rebound faster than if all the accounts on your report were in the credit counseling program. All that is in your control are the steps you take moving forward. Make sure that you pay every account on time, work to get three active tradelines in your name, and keep your monthly balances below 30% of the maximum credit line you are granted.
Kyle S.
Merced, CA  |  February 23, 2012
As recently as last month my credit score was 560 and I had many accounts in collections. With my income tax I paid off all but one (I am not familiar with the account and I wasn't even 18 when it was opened) So I disputed that one. I then opened a secured credit card with a limit of $300. I have an installment loan that I was able to get because I'm in the military that is about 6 months old. I keep my credit card balance lower than 30% and my score has gone up from 560 to 626 - Experian, 602 - Equifax, and 633 TransUnion. When I go to try and get a car (eventually) are these delinquent accounts going to screw me out of getting approved for a loan even if my score is in the "fair" or "good" range? I made a boo boo and disputed an account that was old, which made the date of last activity now show as "0.01 months since most recent derogatory information was reported" on my report. My question is this: Now that my score is somewhat better, and should go up even more since I'm taking daily action to fix it, will my account delinquent histories still matter so much?
February 24, 2012
You share a textbook example of how to improve a credit score. Congratulations on your excellent work. Readers, follow Kyle's example. This is how you do it.

Your question is a tough one because vehicle lenders follow a sliding scale when offering loans. We have all seen those "zero APR" offers in commercials where there is a flash of unreadable text at the bottom of the screen. The mouse-type states that few applicants qualify for zero APR loans. However, the promise of no-cost loans brings buyers into dealerships. More people qualify for 6 to 8% loans, and people with marginal credit histories are offered either high-rate loans or asked to shop elsewhere.

Were you to shop for a loan today, my guess is you would be offered either a mid-rate or high-rate loan depending on the lender's underwriting policies. If you wait six to nine months, my guess is you will be solidly in the mid-rate zone. After five years or so of consistent payments and low credit utilization, you will be up in zero APR territory.
Alma C.
Victorville, CA  |  March 31, 2012
Your post gives me hope! Thanks for posting :)
Steven K.
Swanzey, NH  |  June 06, 2012
I'm a 32 yr old male and i made a some bad choices when i was younger by getting approved for stuff like cc and car loans and bc of stupid reasons i couldn't pay them off. Now i'm just getting into fixing my credit i have a lot of old stuff on it and want to pay it off now. But i also want to get my credit score up. In jan of 2012, i had a credit score of 600 and i did some things where they ran my credit (figured it was hit anyways) till i looked and realized it was getting better but now i'm down to a 545. I want to improve it. My question is, should i pay the stuff on my credit report or just leave it to it goes off? I just got a cc for $300 and i'm just using that on small things and paying it. Capital One offered me a secure card as long as i give them a $200 down payment now. Should i do that and will it improve my credit score?
June 12, 2012
Consider negotiating a pay for delete agreements with your creditors.

Improving your credit score is like getting yourself into shape physically. Getting rid of the old bad debts by paying them off or better, negotiating pay-for-deletes, is like shedding fat. Using your existing accounts, such as the secured credit card, carefully and making payments on time is like building muscle. People who lose fat and exercise regularly look and feel terrific — but results don't happen overnight. Your credit score will improve when you get rid of the bad accounts and pay your current debts regularly — but it won't happen overnight.
Lindsey K.
Lombard, IL  |  February 12, 2013
Here goes my long explanation to get advice similar to this post. I am currently 24 and looking to help fix credit as I don't know much information or for some reason can not comprehend it. I have read almost every article on this web page and still seem confused as to what steps to take to help credit. I have old medical debt in collections which were from between 18 years of age to 21 roughly not sure as to how much as I cannot get my current free report. It's too soon. I am currently a stay at home mother who does not work but am engaged and he makes our income. For insurance purposes we cannot get married and live with my parents so there is no home loan or car loan. We just pay our own personal bills each month... Now we are trying to fix credit as we need car loan and home loan soon. Within a year or so. My question is I have all medical debt in collections. Do I pay it off in a settlement which in turn make it active showing on report or let that be also? I have a few cell phone accounts in collections. Do I pay these off in settlement but than it gets on my report and my score drops badly? I'm not sure how this works if I settle with collections company. It will show badly on the report making my score drop even more. I'm guessing my score is between 350-500. I think what do I do to help? We are budgeting to save money to pay these debts off. We both have secured credit card thru capital one and that's it as far as what we both have beside paying bills off each month. All are in my name, which is car insurance, cell phone, and credit card bill -- that's our bills each month beside food and car and child expenses. Please help. Considered a program would help but not sure what is out there to help my situation.
February 12, 2013
I think you over-analyze your situation.

You do not mention the amount of your medical debt, or how many providers you owe, so it is difficult to give you concrete advice about your options for resolving that debt.

Let us start with a big misconception that seems to be paralyzing you: Paying a delinquent debt does not cause your credit score to drop — well, maybe it does for some credit scoring software, but that's not important overall. Your credit score is harmed badly the moment a debt becomes delinquent. As time passes, and as you take positive steps — for example the secured credit cards you mentioned — the impact of the delinquent account(s) fade.

The more important issue here is the debt. You need to resolve this debt to qualify for loans in the future. Start negotiating settlements with your creditor(s) to get those debts behind you. Follow the link I just mentioned to learn how.

You mentioned you want to qualify for a mortgage and a car loan. Because you are starting out, you may want to consider an FHA loan. Follow the link I just mentioned to learn more about the minimum requirements to qualify for an FHA loan.

Please follow-up with additional questions you may have on this, or the most appropriate page.
Max R.
Brooklyn, NY  |  August 25, 2011
I am in my late 20s with no credit whatsoever. I have enough money saved for a down payment on a house but obviously with no credit I can not be approved for a loan. My bank advised me to open up a secure account card through them which I did and I just use it to make small purchases ever month which I immediately pay off. I have no problem with paying for my day to day purchases and the only reason I need credit cards right now is to build credit. What are the fastest ways for me to build credit without getting pulled into some sort of agreement that might end up hurting me in the long run? Do I just set up the different credit lines, make all my payments on time and NEVER close them out?
August 26, 2011
What you are facing is building your credit pretty much from scratch. A secured card is a good start, but you want to get at least three active tradelines and keep them in good standing. Ideally you want a variety of the types of accounts you have. For instance, if you financed a car purchase, that would diversify your tradelines, as opposed to having only three credit card accounts. A gas station card is a good first unsecured card; they seem to have lower credit restrictions, though I can't tell you that you will qualify for one with your limited history.

Having someone co-sign on a loan is another way to build your score, though the co-signer takes on full risk if you default.

The way to build credit is to take on debt and pay it responsibly. You can't get hurt by getting "pulled into some sort of agreement," as long as you pay the account as agreed and don't use too much of the credit line (aim to never owe more than 30% of the credit line limit, once you pay the monthly bill). Keep accounts open and use them occassionally, to maintain good credit hygiene.
Kelly L.
Chicago, IL  |  February 11, 2011
I have a few credit cards and store cards that I originally opened because of a special promotion or discount that came with the card. I no longer use some of these cards. Will closing them help or hurt my credit rating?
February 11, 2011
The algorithm that the Fair Isaac & Co. uses to calculate credit scores is proprietary and therefore it is impossible to say with certainty how much a certain activity will increase or decrease an individual's credit score. I suggest that you read the article about when to close credit cards and post any follow-up questions on that page.
Sharon J.
Maynard, MA  |  June 09, 2011
I closed my credit card accounts myself, but they all had zero balances. I did this quit a few years ago so how do I get them off my credit report? I wish I had known they would just mess up my score but I thought that I was doing myself a favor by closing them and ended up hurting my credit in the end. Thanks for all the info! Sharon
June 09, 2011
Even if you could delete the accounts in question, I doubt it would help you. One aspect of a person's credit score is the length of their credit history. Deleting or closing a consumer's oldest account with a long history resets the consumer's history to the next oldest account. Deleting or closing all of your accounts sets you to zero. Your best course of action is to gradually open an array of accounts (called tradelines), and keep payments in all current.

Please see the resource Close Credit Card Account for a discussion of this issue.
Ashley N.
Live Oak, FL  |  April 14, 2012
Credit score::: Is it better to pay off all debt in collections in full or is better to do a pay for delete in which it totally comes off completly? I am trying to improve my poor credit rating. Total debt is less than 2,000. I am wanting to buy a home and I know there is steps I need to take to improve this poor rating so I will be able to buy a home. Hope someone can help. Thanks
April 16, 2012
A pay for delete that removes the derogatory accounts from your report would be ideal, if you can get the creditors to agree. If not, paying them off is probably your only choice. Check with a loan officer and find out if the size of the debts and how old they are require you to pay them off to qualify for a loan.
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