How Can I Improve My Credit?

Fix Your Credit Score Rating Repair Improvement Red Toolbox 3d Words

In a finance-driven world, having a low credit score can really hurt you, especially if you are in the market for a home, car or credit card. The good news is that, no matter how your credit score took a hit, there is a way to improve matters. If you follow these tips, you should be able to improve your credit and increase your score.

Your Credit History and Score

Two things that play a major role in your credit score are the type of accounts you have and the amount of debt you are carrying. The length of your credit history is also important. Potential lenders like to see accounts that have been open a long time with a positive payment history. Also, if you have a diverse credit portfolio, it means not all of your accounts will be new. It is important to have this information so you can begin working on your credit immediately. The sooner you begin making positive changes, the faster you can reap the benefits of an improved credit score.

Since creditors like to see a lengthy credit history, you may not want to close any long-standing accounts. If you have a Walmart credit card you opened to buy Christmas presents four years ago, it may be tempting to cancel it. However, it is a better idea to pay off or transfer the balance so you can keep this credit line open. Even if you do not use a credit card, you may want to keep the account open, as it will add to your credit history. Also, if there is no balance on the card, it will decrease your debt to available credit ratio, which will increase your score.

Steps for Improving Your Score

Now that you have some background, let’s walk through how to improve your score.

Step 1: Study Your Credit Report

An easy way to increase your credit score is to eliminate any errors on your credit report. For example, perhaps you have paid off an account, but it is still showing up as a debt on your report. Keep in mind that it can take 30 to 60 days for a change to appear on your report, so do not expect changes immediately after paying off a debt. However, if 90 days have passed, contact the credit bureau and your creditor to get the error fixed. will give you access to a free copy of your credit report from all three credit bureaus every year. You will not be given access to your score for free, but you can see the issues that are affecting your score, and it will help you find and correct any errors.

Step 2: Pay Off Your Debt

Your debt utilization, which is the amount of debt you have versus the amount of available credit, is a big portion of your credit score. When you start paying down your debts, your score will improve dramatically. You want to aim to keep your debt utilization below 30%.

Step 3: Make Payments On Time

Late payments are one of the most damaging factors to your credit score, so it is imperative to make all payments on time. If you have 30 or 60 day delinquencies, they will kill your credit score. Even if you can only make the minimum payments, make sure you establish (or re-establish) a payment cycle. If you can add extra money toward the principle, even better, but at least make the minimum payment on time every month.

Step 4: Be Patient

It is important not to apply for new accounts when you are trying to improve your credit. You want a well-rounded credit history, but opening new accounts can temporarily lower your score. If you let your credit history build up, your credit score will increase on its own.

As difficult as it is to be patient, you need to understand your score will not improve immediately. While you will want to start working on your credit right away, know it could take months or even years to get a 750+ score. Your hard work should get you out of the “poor” rating quickly, though. You just need to make the right financial decisions and keep good habits.

About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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