How to improve your credit score – The 29 Best Ways

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If you’re like millions of others, you’ve probably wondered, at least at some point, how to improve your credit score. My goal is to discover and pick apart all the moving parts to making up a credit score in this article.

But, your credit score is just one piece of your financial puzzle. However, it will likely be the most severe impact on your finances. The key to improving and maintaining a good credit profile is a sound financial plan. Indeed, improving your credit score comes down to your ability to responsibly use debt, says Jonathan Hess, with Hess Financial Coaching

Why is your credit score important?

Your three-digit credit score determines two things. One, your credit score determines whether or not you’re a credit risk. For example, a higher number means you’re a lower risk. By contrast, a lower number indicates a higher credit risk. Second, your credit score has a direct correlation with the interest rate that the lender will offer. A score north of 750 will put you in the lowest credit risk category, thus allowing you to enjoy low-interest rates. However, a score in the 500’s means you’ll be paying far more in interest.

Credit reporting agencies

There are three credit reporting agencies (Equifax, Experian, and Transunion). And, each credit reporting agency generates your credit score slightly differently. However, they are pretty consistent in viewing what factors get considered as higher and lower risk factors. As a result, you should have a similar credit score across the board.

The two highest-risk categories are your payment history and your credit utilization from the credit reporting agency perspective. These two factors, making up a combined 65% of your total credit score.

You can obtain your credit score from one of the three credit reporting agencies. However, it’s probably not the credit score that your lender will consider. Instead, the score your lender wants to know is your FICO score. FICO is a US company that sells their scores to lenders.  

Your credit score gets created from just five simple things: 

How your credit score gets generated

Your credit score is a three-digit number. And, it can have a big impact on your life, says Amy Maliga, from Take Charge America. From acquiring loans and credit cards at reasonable interest rates to renting an apartment to getting a job, your credit score comes into play at most of life’s milestones. It’s best to maintain a score that’s considered “good” or better. Ideally “excellent”. And then, work on improving what isn’t helping you meet your goals.

Payment history (35%) 

Your bill payment history is the most critical factor in calculating your credit score, says Nikki Kirimi from Money World Basics. Payment history makes up 35% of your credit rating. When assessing your payment history, credit bureaus will look at:

  • How often you are late in making payments
  • How many days you are late to make a payment
  • Serious payment issues such as bankruptcy, repossession, or foreclosure

So, it’s essential to pay your credit cards, lines of credit, loans, mortgages, etc. on time every time to build and maintain good credit.

The longer you pay your accounts on time, the more you’ll demonstrate a strong track record. And, that will make you a better credit risk. A high credit score means you’ll get offered higher limits and better interest rates in my own experience.

Amount of debt (30%) 

Having a $5000 credit card limit and having $4500 is a high ratio of usage. You would be better with a $10,000 line of credit and only use 50% of it.

The common misconception is that you want to shoot for around a 30% utilization rate. This can be damaging, says Hirsch Serman, CPA, MBA from Lifecycle Financial LLC! At 30%, you get considered at the cusp of high reliance on your available revolving credit. You want to stay well under 30% and, if possible, under 10% of what your available credit.

So if your total credit limit is $10,000, try not to keep a balance over $1,000. The best solution is to learn to pay down your debt. Further, keep your credit card balances low, says Omer Reiner from Florida Cash Home Buyers

Related read:  How To Off Down Debt Fast

If you carry a balance, pay cash. Contrary to popular belief, paying cash and not NEEDING the credit is a massive help to lower debt. Lower debt means improving your credit score. Imagine having a $20,000 credit limit on a credit card but never using more than $2000 of that amount, says Holly Wolf from Berkshire Advisors.

Credit Mix (10%)

Your credit mix refers to the different types of loans and lines reported in your credit report. For example, credit cards, lines of credit, personal loans, and mortgage(s) are common credit types.

While most first opt for a credit card, it’s also essential to have at least one installment loan. That and at least three revolving credit lines is the right mix of credit. And, it shows that one is responsible for multiple types of credit accounts, says Shawn K. Lane from Financial Renovation Solutions Inc.

Mason Miranda from creditcardinsider.com agrees. Get a personal loan, but only if you have a practical use for one. Personal loans offer another type of account that will add to your credit history arsenal. Just don’t go into unnecessary debt, suggests 

Having a good mix of accounts, e.g., revolving credit, mortgages, personal loans, car loans, etc.) is good for your credit score. Hard inquiries will slightly lower your credit score in the near term. But, in the long run having more accounts will substantially increase your credit score. No doubt because of the total credit limits granted and the varying types of credit you have. The benefits of having more active accounts far outweigh the hard inquiries.

Length of credit history (15%)

Your credit score is a reflection of patterns in your credit-related behaviors over the past 7 to 10 years. Since it gets generated on patterns and not snapshots, you cannot build credit overnight, says Todd Christensen, Founder, 50PlusOnFIRE LLC. Any legitimate way to improve your credit score will take 6-10 months.

I recommend leaving old accounts open, even if you don’t use them, says Lisa Bigelow from Little Bundle. It might sound counterintuitive, but credit reporting agencies like to see consumers maintain longstanding relationships with creditors. 

Maureen Decker from Prime Financial Services agrees. Keeping your oldest lines of credit open can be beneficial when trying to raise your credit score. Doing so will increase your utilization ratio. Also, it shows lenders the length of your credit history, says Decker.

New Credit / Inquiries (10%)

Applying for credit too often, or being denied credit regularly, can have a very negative effect on your credit score as you may be desperate for credit, says Holly Andrews, Managing Director of KIS Finance. Doing so implies that you could spend your balance in one go. Or perhaps, make cash withdrawals on a credit card without having the means to pay it back.

Most companies now allow you to carry out a soft search on a product before formally applying. A soft search doesn’t come up on your credit file. And, it should give you a good indication as to whether your application will get approved.

Valerie L. Moses, from Addition Financial, agrees. When establishing your credit, be mindful when opening new credit cards, adds Moses. Too many hard credit inquiries can lower your credit score, and some credit cards may not serve your best interest. 

Apply for no more than one card in a year, says Pericles Rellas from Abundance & Prosperity. If you are loan hunting, credit reporting agencies will generally consider it as a single inquiry. As a result, they won’t ding your credit score. Yeah! Score one for the little guy.

Ways to improve your credit score?

Start Early.

I started building credit (not knowingly) at 18 years old, says Shanice Miller of PropertyRecordSearch.com. Miller received an offer in the mail and was very disciplined about using her credit card. She only used it to put gas in her car or anything that she had the money to pay for. And, would pay it off about three weeks after making a charge. 

After the first year, Miller started getting more credit card offers, which she accepted. Also, she’d get higher credit limits on the newer cards. 

But, not everyone has the same experience. Unfortunately, many younger people don’t learn how to manage credit appropriately in school, says Dustin Singer, Realtor. It’s the knowledge that should be required to buy vehicles, buy a home, start a business, and overall live a financially healthy life. When Singer turned 18 and onwards through his early 20’s, he did not use credit cards appropriately. 

It sounds great to have companies extend you thousands of dollars of credit when you’re young and wanting to purchase anything and everything. Unfortunately, this didn’t turn out well for Singer. He missed payments, maxed out cards, and they took forever to pay off between late fees and interest. Then, Singer spent years afterward improving his credit score. 

Get a copy of your credit report.

Building and keeping a good credit score is an ongoing process. It all starts by accessing a copy of your credit report. Then, checking for any errors, says Jen Start, founder of Happy DIY Home.

By consistently auditing your credit reports, you’ll develop a good habit of managing your reports. And, you’ll better understand how to read your reports and what to look out for when it comes to inaccuracies, says Janay North from Rise Up. If you were to ever come across any accounts that are unfamiliar to you, be sure to report the accounts to the bureau and creditor immediately. Send them both debt validation letters so they can inform you of how they have linked the account to you. 

The easiest way to learn what your credit score is by downloading a free app like Credit Karma. We have used Credit Karma for over a decade, says Kelan & Brittany Kline, Founders of The Savvy Couple. And both Kelan and Brittany hold credit scores that are ~800,

We have found it’s best to have the right mix of credit lines that you leave open even if you don’t use them. Cut up your old credit cards vs. closing your account. As well as asking for a credit limit increase every 6-12 months. Doing so will ensure you always stay far below the 30% credit card utilization ratio, say the Klines.

And review it weekly – Free!

Now through April 2021, you can pull one free credit report per week from each of the three credit bureaus. This is especially important during a pandemic, as scammers tend to prey on our sense of fear and distraction during uncertain times, says Valerie L. Moses from Addition Financial.  

Related Read: How Millennials Can Cope With Their Finances Amid COVID-19

Suppose you do find any fraudulent activity on your credit report. In that case, you can create an identity theft report with the FTC. Then, provide that to creditors as documentation as you close out any accounts opened in your name.

Dispute Inaccurate Info

First, check your report for errors to make sure everything is correct, says Robert Farrington, Founder of The College Investor. According to the FTC, one in five Americans has a mistake on their credit report. See the FTC report here.

If there’s incorrect information on your credit report, it’s essential to dispute the information, says Leah Bourne, from The Money Manual. The key here is to dispute it with all three agencies (Experian, Equifax, and Transunion). Start by getting your free report with each credit reporting agency, and then begin by disputing the inaccuracies. Word to the wise: Many more people have inaccuracies on their report than they think, so make sure you check with each of the credit agencies, says Bourne.

Review and dispute any errors on your credit reports by contacting the relevant credit reporting agency to Experian, Equifax, or TransUnion either Online, by mail, or by Phone. You will need to gather evidence supporting your dispute and supply this to the agency. 

Read the T’s and C’s

However, if you dispute online, make sure you read the terms and conditions as you might be giving some of your rights away, says William Schumacher, CEO & Founder of Uprising Food. But if that makes you uncomfortable, mail them in and keep track of when you sent the disputes. 

It will typically take 30 to 45 days for the dispute to get settled, says John Davis from Score Sense. However, If the credit bureau does not receive a response within 30 days, they are required, by law, to remove it. However, it may be added back to your report at a later time if the creditor sends proper documentation, says Randall Yates, founder, and CEO of The Lenders Network.

Pay Your Bills On Time

The easiest way to improve your credit score is by paying your bills on time or, if possible, even ahead of time. If you’ve racked up some debt, it’s best to strive to take it out of the picture, says Jordan Tarver, a credit expert at Fit Small Business.

Once you have one credit card under control, opening a couple more credit cards that you’ll use responsibly will signal to the bank that you’re capable of managing debt responsibly. Doing this will help improve your credit score. I wish I knew this tip at the start of my credit card journey. Since learning it, however, my credit score improved tremendously, adds Tarver.

Related Read: A Millennial’s Financial Journey

Building credit requires time and patience. 

Quote: It takes just one late bill payment to knock your score down by 100 points, but months of on-time payments to bring it back up again, says Sara Rathner, Credit Card expert from NerdWallet. So when it comes to your credit score, think long term. 

You might not plan to buy a house or car any time soon, but if you lay the foundation early on by using credit responsibly, the path will be so much easier for you in so many ways, adds Rathner.

Set up email or text alerts to remind you that it’s time to pay a credit card bill, utility bill, or other statements. That makes it easy to keep up with due dates not to miss a payment and potentially hurt your credit score.

High Limits, Low Utilization

You want credit cards with a high credit limit because this will increase your overall credit limit (each card’s credit limit added together), causing your credit score to rise. 

But, this creates a paradox. The credit paradox, says Chris Motola from MerchantMaverick.com, is you want to have a lot of available credit. But you don’t want to look too eager to use it in a way that’s irresponsible in the eyes’ credit reporting agencies. 

If you have a good history with your bank or other lenders and pay your bills on time, consider asking for a credit limit increase. There is little reason why they shouldn’t increase it, says Judson Hill from www.bespokefinancial.com

In particular, American Express is famous for giving high credit limits, says Andrew Kolodgie, Owner of The House Guys. On top of that, American Express will 3x your credit limit after 61 days of account opening (upon your request) with no additional hard inquiry.

When you increase your credit limit, you instantly decrease your credit utilization.  However, it’s essential to be responsible with credit and not go further down into a debt spiral, thanks to the increase.

How to get a much higher limit on my credit card?

Get multiple credit cards with a single issuer and then combine them. Sometimes, it is easier to get an additional credit line and then merge the two lines of credit into one, says Anthony Babbitt. If you get denied a credit limit increase, find out if you can combine credit lines. Some banks do not allow this, but many do. Not all of them advertise this fact. 

New lines of credit often include promotional interest rates or spending bonuses. So if you have an old card with a $2,000 limit, you may be able to get a new line of credit for $5,000 with no interest for one year. You can then merge the credit lines to give the new card a $7,000 limit with no interest (but take a hit on credit age) or make the old card a $7,000 limit (but lose the interest-free period), adds Babbitt. The credit market is highly competitive, and a little creativity goes a long way towards saving money and improving your credit.

Can having a zero balance on my account improve my credit score?

It’s best to use a card at least quarterly to keep it active, says Carma Peters, CEO Michigan Legacy Credit Union (MLCU). Active credit trade lines get considered in a credit score by credit agencies even if they have a zero balance – as long as at least one purchase gets made with the card quarterly. If not, it will drop off as an active tradeline, adds Peters.

Todd Miller from Tightwad Todd agrees. Creditors don’t want to see a 0% credit utilization rate. An inactive account could indicate that you aren’t using your credit at all. Instead, they want to know in how responsible you are with debt. So, making a few small changes and paying the bill off in full each month is a great way to increase your scores.

Become an authorized user

When you become an authorized user on someone else’s credit card account, their credit history gets reported on your credit report, says Andrea Woroch, Money-Saving Expert. Finding someone who has an excellent credit history. Then, ask if you could become an authorized user on their account, it will benefit your credit score. Just make sure you ask someone you trust and is very responsible with money. Indeed, any poor credit card management on that card also gets reported on your credit report.

However, only become an authorized user if you’re related. If you’re not related to the primary account holder, FICO has gotten wise to that. And, unfortunately, it won’t count, says Ryan Daniel, President at FinanceManagerTraining.com.

Watch your debt to income ratio.

Many millennials have high debt to income ratios due to student loans. Those looking to build their credit score or repair their existing credit may have trouble qualifying for a standard card. In those instances, a secured credit card is a smart option to consider.

Mike Kinane, head of US Bankcards at TD Bank.

Secured cards usually require a refundable deposit from the consumer. The card works like a traditional credit card, except the funds get secured by the consumer’s deposit. From there, the consumer can improve their credit score by using the card and making on-time payments, adds Kinane. Secured cards report to the credit bureaus, so proper use will help a score improve over time. 

Have a sound financial plan

Other than health, there’s nothing better than a sound financial plan. And, there are lots of moving parts in a financial plan. However, Rome wasn’t built in a day, and neither is your financial house. Here are the most important pieces in a financial plan that will get you on your way to improve your credit score.

Create a Monthly Budget

Chances are you will have a tough time following the suggestions offered in this article without the benefit of a substantial budget, says Cristina Yasakci from CreditAchievers.Today.  

If you don’t know how to make a budget, today is the day to learn!

It might take you a few months to get used to it. But, it would be the key to improving and maintaining a healthy credit profile. Earning more money may not be that easy, but making the money you already earn work harder for you is well within your means.

Tara Alderete, a financial educator at Money Management International, agrees. If I could tell my younger self to do anything to improve my credit score, it would be to create a balanced budget and stick to it. I always think about credit and budget as puzzle pieces that work together, adds Alderete.

Whether credit is used for convenience, to gain rewards points, handle an unexpected situation, or ‘buy now, pay later,’ living within a balanced budget helps ensure we live within our means and pay our bills on time. In this way, we can naturally maintain a positive credit score and allow credit to be a tool that works in our favor.

Pay down your debt

Keep your credit utilization rate below 30% at any given time. Your credit utilization rate refers to how much total credit you have available versus the amount you’re using. The more debt you’re carrying vs. much total credit limits you have will decrease your credit score. It will also make you look like a risk to potential lenders, which will lower your score. 

Therefore, it’s important to pay down your balances. Since many people feel tight on money right now, there are simple ways to make some extra cash. For instance, many people are learning how to get a side hustle. Indeed, there are many side hustles that folks can do to start earning an extra $1000+ a month, with little effort.

Related read: How to get out of a debt spiral

Whenever we finance a new investment property, our banker always checks our credit score, says Jonathan Sanchez from Parent Portfolio. Paying off debt (i.e., credit cards) can improve a person’s credit score. However, it’s not enough to pay off any debt. A person has to be particular on which debt they should attack. The key is to have a low credit utilization ratio. The credit utilization ratio is how much debt you have, divided by the credit limit.  

At least, make the minimum payments.

I recommend people find a strategy that works for them to pay their bills on time, says Lindsey Danis. Danis avoided paying bills when she got stressed about money, and she’s not alone. Naturally, late payments negatively impacted her credit score. 

It’s better to make timely payments of just the minimum, rather than winding up paying late (plus, then you owe a late fee). Automating payments works for some people. But if that feels too stressful, calendar reminders, or whatever system works to get the payments set up on time each month adds Danis. Once that’s taken care of, identifying one large balance at a time to pay down is motivating–you see the total balance decrease over time, and you begin to feel confident. 

Automate your payments.

Indeed, the most critical factor in your credit score is your payment history, says Janet Patterson from Highway Title Loans. How timely and responsibly you managed your prior loans and debts and how you paid them off plays a significant role in increasing your credit score, adds Patterson.

As a result, it’s imperative to pay all of your bills on time, by the due date. If you are forgetful, consider setting up an automatic bill payment to transfer the payments from your bank account to the creditor, says Mark Kantrowitz, Publisher and VP of Research from Savingforcollege.com. Doing so will prevent you from being late with a payment (unless you have insufficient funds in your bank account). A record of never being late with a payment for several years will help improve your credit scores.

Should I pay installment loans faster?

Installment loans (a.k.a. Personal loan) usually come with a specific term and interest rate. For example, you might buy a car using an installment loan. The loan structure could be $20,000 at 4% for 60 monthly payments of $368.33. 

There is no need to worry about paying installment accounts faster, says Emily Deaton, CMO, Let Me Bank. Installment loans have a small impact on your score. Instead, it’s better to pay your revolving balances off as soon as possible. At the very least, aim to pay those balances down to less than 30%. Doing so can improve your credit score in less than 30 days.

Chuck Vander Stelt from Quadwalls agrees. Terminating a credit including paying off a personal or installment loan, i.e. for a car, can momentarily negatively affect your credit score. 

Transfer your balance and lower your interest rate

High interest can make paying down your balance tricky. Right now is a good time to transfer your balance to a new card offering 0% on balance transfers. Some of these promotional periods last for anywhere from 12 to 21 months, buying you more time to pay down the balance without accruing interest. The benefit here is that more of your money goes toward the principal balance, so you lower your debt faster and boost your credit score. When looking for a new credit card, compare offers at sites like CardRates.com for detailed reviews and compare sign up bonuses. For example, the Chase Freedom card offers $200 back when you spend $500 in the first three months. It’s a sweet reward for helping pay down your debt and boost your score.

How many accounts are too much or too little? 

If you speak with your parents and grandparents, they’ll likely tell you only to have one credit card. And, pay it off every month if you use it or only use it in an emergency. The problem with this logic today is that it makes it very difficult to build credit and establish your ability to pay off larger amounts that you may borrow for something like a house, says Josh Simpson from Lake Advisory Group

Contrary to popular belief, you can never have too many credit card accounts, says Landon Davis from collegebread.com. The idea is that the more credit accounts you have open, the stronger your credit file is, the more banks will view you as a safe borrower. 

The one caveat?

You must handle your accounts responsibly. I mean lower than 10% utilization, no missed payments, no late payments, long credit life, etc.

For someone who wants to boost their credit score and file, apply for a new credit card every six months. Handle each account responsibly. You will have an 850 in no time, adds Davis.

Debt Snowball Method

Focus on paying down your debt rather than opening new lines of credit. Many people have the tendency to spend money they don’t have. And think they can just pay it back in small monthly payments. If you find yourself with a large amount of debt, using the debt snowball method is incredibly useful, says James Watson from Omaha Homes For Cash.

How does the debt snowball method work?

Pay off your smallest account in full first. Then move on to the next smallest account and pay that off in full. For the most part, ignore the interest rates and focus on paying off the smallest account. Doing so allows gives you the satisfaction of having an account fully paid off. And, it will unconsciously encourage you to pay off the next one to feel that same satisfaction. As a result, don’t worry about the interest rate.

What if my debt went to a collection agency?

Once a collection agency buys the debt, you have much more negotiating room. Collection agencies often buy debts for 10-30 cents on the dollar, based on the original debt and absent any penalties, interest, or fees, says Anthony Babbitt

Indeed, a debt collector is due much less money than the original creditor. And this puts you in an excellent position for not only paying a lesser amount but also negotiating the removal of the item from your credit report. 

When negotiating with a debt collector, always insist that they provide a WRITTEN offer that includes deleting the debt from your credit report. Indeed, this is a “pay to delete” offer and both the courts the credit bureaus accept it. Also, it means you do not have to worry about the two years re-starting once you pay your collection. 

Andrew Jezic from Law Offices of Jezic & Moyse agrees. Only after the agreement gets collected in writing should one pay a collection account. Then, be diligent about seeing the account deleted. Doing so can improve one’s credit score 80-90 points by itself, adds Jezic.

Without a pay to delete, paying off a collection penalizes you for two years since it gives new life to the account.

How to increase your credit score when you have no credit

Start early and start small. Building credit is a long game, so it is essential to develop a history over time with manageable payments. Instead of making these payments on a large purchase, other tools could help you build credit responsibly. For example, if you have no credit or bad credit, consider tools like credit builder loans or secured credit cards, says Lauren Bringle with Self Financial.

Indeed, many people don’t know the credit builder loan. It’s an accessible option for all consumers with no or low credit scores. These allow you to make small monthly payments to yourself over 1 to 2 years. Self reports these payments and the balance on your account to all three credit bureaus. At the end of the term, the money you’ve paid every month unlocks in the form of savings less any fees while building your credit score.

Get a Secured Credit Card

Consider visiting a local credit union and got a secured credit card, suggests Derin Oyekan from Reel Paper. People can get a secure credit card when they have a low (or no) credit score. They put their own money as collateral and get—a similar credit limit. For example, I put down $1,000 as collateral for a credit card, so my “credit” limit was $1,000. I had to follow the same rules as a credit card like pay my bills on time etc. 

The reason why you put money down as collateral is in case you can’t pay off your debt. Then, the bank will use the money you put down as collateral. It’s a safety net for the banks to be able to trust you with credit. 

And then comes the return

After some time, lenders may return your deposit. Or, you can apply for a credit card elsewhere. Then close down your secured credit card. However, considering the credit account’s length, it would be better to convert the secured credit card to an unsecured (traditional) one.

Indeed, one excellent way to increase your credit score is by NEVER closing old credit cards. When you close a credit card account, you lose all of the available credit on that account. It will decrease your credit utilization and will affect your credit score. My advice is to keep the account open. But be aware. If you don’t use your cards for a while, they might be at risk of being shut down for inactivity. So, be sure to use them every few months. One trick I’ve done is send a pre-payment to my credit card (i.e., $20). Then, use the credit for a purchase.    

Credit Builder Loan

Instead of borrowing money just for the sake of establishing some credit history, consider opening a “credit builder loan” through a company like Self, says Brian Davis from Spark Rental. With Self, you agree to make payments for a certain period. They set aside your money for you in a CD, and they report your payments as if it were an installment loan. And, at the end of the contracted period, you get your money back.

Give your credit score a boost

Need to buy a house or a car rapidly? Experian lets you use a tool called Experian Boost by attaching it to your bank account. Experian Boost works by giving you credit for phone and utility bills that you already pay. If Experian Boost is not good enough to get your credit score raised, get rent counted on your report using a tool like Credit Rent Boost, says Kit Eizenga from Wasatch Smart Finance. This company reports your rental payment history to Transunion and Equifax. As a result, it can improve your credit score, albeit for a small monthly fee.

Another new and effective way to boost your credit score is with Perch. While other companies might charge a fee, Perch users can report each monthly expense (i.e., Rent, Netflix, Gym Membership, etc.). The app then tracks the payments to ensure the users are spending responsibly and learning financial literacy, all for free. By reporting these expenses, users can see a boost in their credit score in as little as two weeks. So, Perch could be a great way to improve your credit score quickly.

Pay Down Your Balance Before the Reporting Date

One of my favorite hacks for improving your credit score is to find out when your balances get reported to the credit reporting agencies. Then, make a payment a few days before, says Connor Brown, Founder, After School Finance.

Lets say your credit card issuer reports your balance to the credit bureaus on the 15th of the month. In that case, try to make a payment a few days before the 15th. Doing so will lower your credit utilization ratio and help boost your score, adds Brown.

Delyanne Barros, Attorney & Money Mentor agrees. Cardholders should find out when their credit card companies report their outstanding balance to the credit agencies. Then, pay down their balance before that date. Sometimes this is referred to as the statement closing date. But not always, so it’s best to confirm directly with the credit card company. By doing this, you are keeping your credit utilization ratio down. And that accounts for 30% of your score, adds Barros.

If I could go back and talk to my 20-year-old self about improving my credit score, my #1 piece of advice would be this: never charge more than 25% of your available credit. In other words, if you have $1,000 in available credit, never allow your used balance to exceed $250.

Jim Miller, Author of Budgeting Doesn’t Have to Suck: For Young Adults Who Want More Money

Can I help my child or teenager improve their credit score?

One of the best things parents can do to assist a child with building their credit is to make them an authorized user on a credit card account, says Kirk G. Meyer, a financial advisor and the author of two self-published books on credit.  

The child does not need access to the card or account, but it will get reported on their credit report by listing the child as an authorized user. And a significant factor of someone’s credit score is the length or age of their credit, adds Meyer. Adding a child as an authorized user on an account will get added as an account on their profile, and provided the parent does not close the account or remove them, it will remain in their file. \

Get Help Before Your Credit Score Plummets

If you find yourself having trouble keeping up with the bills, get help before you need to declare bankruptcy or end up with wage attachments, says Julianne Miller from Life Money Management!

For someone who is having a hard time making minimum payments, debt settlement may be an option, says Freddie Huynh, vice president of credit risk analytics with Freedom Debt Relief. Debt settlement companies, regulated by the Federal Trade Commission, work on behalf of consumers to lower principal balances by negotiating with creditors.

Separate your personal credit from business credit.

The most important tip I can give to young entrepreneurs is to separate their personal credit from business credit as much as possible, says Steve West from Entrepreneur Nut. I didn’t bother to do this, and my company loans and expenses maxed out my credit lines and placed my personal savings at risk. Moreover, building a separate credit profile for business allows you more access to credit as a consumer.

The best way to increase your credit score is NOT to NEED A CREDIT SCORE!

While we spend a lot of time obsessing about improving credit scores, Christopher Burgelin, Owner at CallWeBuyHousesFast.com, doesn’t care about his credit score.

“I don’t care what my credit score is, and neither do the people who lend to me,” adds Burgelin. Indeed, the truly wealthy, and those who understand how to become financially independent, often either don’t know their credit score, don’t care about their credit score. Surely, it’s because they’re too busy building the only thing that matters, and that’s their Balance Sheet.

How to improve your credit score F.A.Q.

How do I get a perfect credit score?

To get a perfect credit score, give yourself time. It will likely take several months, or years, of consistent effort to build your credit score into the good to excellent range. It’s especially true if you’ve had issues with credit in the past, says Tawyna Redding from Money Saved is Money Earned.

Is it possible to have a different credit score at other reporting agencies?

Indeed, there are three credit reporting agencies, Equifax, Transunion, and Experian. Each credit reporting agency has its specific credit scoring models. As a result, if you check your credit report from each of the three reporting agencies, your score might differ.
To complicate things even more, the scores provided by the credit reporting agencies might not even matter. Your lender is more than likely going get your credit score from FICO, a US company.  

Does having more than one credit card help improve my score?

Adding many new accounts at once can cause a ding to your score. Indeed, “hard” credit inquiries will affect your score for up to a year. It is best to keep new credit minimal, says Kathy Williams, a Principal and Senior Wealth Strategist at Waddell & Associates. Open those accounts that you need, and ideally don’t add more than one account per year. 

Most importantly, having more credit cards can be hazardous to someone who doesn’t have the ability or discipline to NOT charge them to the max (behavioral side of credit), adds Williams.

When do you need to know your credit score?

Ideally, you should always know your credit score. However, it’s best to know your credit score before applying for a loan. This way, you’ll have an opportunity to improve your credit score should you be applying for a high value loan such as a mortgage, or car loan.

Final Thoughts about improving your credit score

In my experience, I’ve been able to get a near-perfect credit score by having just a few credit accounts open. But, they’re open for a long time (7+ years). And, with very high limits (20k+), and with low balances (less than 10% of total). As a result, my high credit score allows me to borrow at incredibly low-interest rates when I need it.  

For example, I don’t have to worry about high-interest rates with my excellent credit score when getting a mortgage.

Your credit score adjusts all the time – up and down. Sometimes, paying off a debt can lower your credit score for a month. But in the long run, it will boost it significantly, says Robert Farrington, Founder of The College Investor. Don’t get caught up in your score’s daily movements – focus on improving it for the long term.

Furthermore, credit scoring models tend to change from time to time. For example, it’s critical to understand how recent credit scoring changes may affect your score.  And, know to counteract these effects if they’ve resulted in a lower score, says Brian Martucci from Money Crashers.   

Indeed, anyone can improve their credit score. But, like all good things in life, it takes time and effort. 

If you have something to say about this article or have a question, please feel free to comment below! And, if you think someone would benefit from reading it, certainly go ahead and share it with them!

Rick

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