10 Tips and Strategies to Improve Your Credit Score

Improve Credit Score

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Your credit score is a key indicator of how risky you are to lenders and creditors considering extending you a loan or line of credit. Because these entities don’t know you personally, all they have to go on is a review of your previous payment history and other related behavior.

FICO is the most commonly used credit score, so that’s what we will focus on here. Your FICO credit score will typically fall between 850 and 300 based on your credit history. Anything above 750 is considered excellent credit, but a score of 600 or below makes you a poor credit risk.

If your credit score isn’t where you would like it to be, there are some things that you can do to improve it. By implementing these strategies, you can reap benefits including lower interest rates on loans and the ability to secure higher credit card limits.

Tip #1: Pay Your Bills on Time

One of the best ways that you can improve your credit score is by paying your bills on time. In fact, payment history is one of the primary categories reviewed by the credit card bureaus when determining your credit score. It accounts for 35 percent.

Payments that are delinquent (even if only by a few days) can have a negative impact on your credit score. It can be beneficial to set reminders if you have trouble remembering which bills are due when.

One way to do this is the old-fashioned method of writing the due dates on a paper calendar. If you prefer a more modern strategy, there are many helpful smartphone apps for bills and budgeting.

Credit Score Report
By setting reminders for payment due dates, you are much more likely to pay bills promptly.

Tip #2: Pay More Than the Minimum

Paying more than you owe each month on your outstanding debt balance can have multiple benefits, reducing your overall debt load and helping you to pay off balances faster.

If you have more than one debt balance (such as several different credit cards), making more substantial payments on one account while continuing to make at least the minimum payments on the others can help you to focus on reducing these balances one at a time.

Once you have fully paid off one balance, you can then focus on another, and so on, until you’ve fully paid off all of your debts.

Tip #3: Work on Paying Off Debt (Rather Than Just Moving It Around)

One of the other significant factors in determining your credit score is the amount of money that you owe compared to the amount of total credit available. Your total credit available is known as your open credit utilization rate.

It’s best if you aren’t at or near your overall credit limit on your card(s). Utilization refers to how much of your available credit you’re using. It includes the percentage of each credit card, as well as the percentage of total available credit.

Lenders and creditors pay close attention to a borrower’s utilization ratio. Borrowers with a high utilization rate are, on average, less likely to pay back what they have borrowed. Alternatively, someone with a low credit utilization rate will likely have a higher credit score.

For example, if you have a credit card that has a $20,000 credit limit on it, a $2,000 balance is better than a $15,000 one. In this case, the lower balance is given a higher rating for credit scoring.

The amount owed on different types of accounts can also make a difference. For example, it is better to owe $50,000 on a mortgage than to owe $50,000 on a credit card account.

Hot Tip: Paying down these loans can make a big difference in your credit score. For example, if you borrowed $20,000 to purchase a car, and have paid off $10,000 of that, you are viewed as being able to manage and repay your debt.

Tip #4: Check for – and Remove – Any Incorrect Information on Your Credit Report

Making sure your credit report is both accurate and up to date is one of the best steps that you can take in boosting your credit score. According to the Fair Isaac Corporation (FICO), the company that provides the credit score model to various financial institutions, the median credit score in the U.S. is 695. Half of those with credit in the U.S. have credit scores that are above this number, and half have scores that are below.

There are several ways to obtain your credit report, including online services that also offer credit monitoring and identity theft protection. It is essential to be careful when seeking a copy of your credit report, though, as you can get lured into paying for services that you don’t want or need.

Hot Tip: Every year, consumers are entitled to one free copy of their credit report from each of the three major credit bureaus. You can obtain your reports by going to www.annualcreditreport.com. Other free opportunities for viewing your credit report include if you are unemployed or on welfare, your credit report is inaccurate, or it has been less than 60 days since a lender or a creditor denied you credit.

When you receive your credit report, you should read it over carefully to ensure that all of the details are correct. If you find any inaccurate information, report it to the credit bureau immediately to have it removed from your credit report. Otherwise, it may continue to harm your credit score, along with your chances of obtaining future credit.

You could raise your credit score, in some cases significantly, by removing any incorrect information.

Tip #5: Reduce Your Debt-to-Income Ratio

Your debt-to-income ratio, or DTI, is a personal finance measure that compares your monthly debt payment to your overall income. It is one way that lenders measure your ability to manage monthly income and repay debts. DTI is determined by dividing your total recurring monthly debt (such as a mortgage, auto loan, and credit cards) by monthly income. (1)

If you have a low debt-to-income ratio, lenders and creditors see that you have a good balance between the amount of debt that you carry and the amount of income that you earn.

On the other hand, a higher debt-to-income ratio can be a sign that you have more debt than you can support with your income. It makes you a higher lending risk.

Hot Tip: Paying down debts can reduce your debt-to-income ratio and make a positive impact on your credit score.

Tip #6: Have a Good Mix of Debt

Having a balanced mix of debt can be better for your credit score than having all of your debt in a single type of debt.

There are many different types of credit, including:

  • Mortgage loans
  • Bank credit cards
  • Installment loans (such as vehicle loans and student loans)
  • Retail and gas station credit cards

Based on research from FICO, consumers who have a mix of credit types on their credit report tend to be less risky than those who have experience with only one type of credit. (2)

If you have a total of $150,000 in outstanding debt, it is better if it’s a mortgage balance, car loan, and some credit card debt versus $150,000 in unpaid credit card balances.

The types of credit you have used will account for 10 percent of your total credit score.

Hot Tip: If you’re a business owner, you’ll also want to work to improve your business credit score.

Tip #7: Keep Your Credit Cards, Even If You Are Not Currently Using Them

Your credit history factors into the strength of your credit score. This factor will average the ages of your loans, credit cards, and other lines of credit.

A long history of credit offers a lender more information to assess your creditworthiness. A long credit history can also be an indicator that you have successfully been able to obtain and manage credit for an extended period.

Keeping credit card accounts open even if you’re not using them can be a good strategy for retaining a long credit history. If you cancel old credit cards, you could shorten your credit history and hurt your credit score. However, it may not be a good idea to keep a credit card open if it has an annual fee and you’re not using it.

Tip #8: Don’t Apply for an Abundance of New Credit

Be careful about applying for lots of new credit, especially if you don’t need it. Each time you apply for a new credit account, lenders pull a hard credit inquiry. Too many hard credit inquiries can hurt your credit score, particularly if the inquiries take place within a short period.

It is important to note that there is a difference between a hard credit inquiry and a soft credit inquiry. Hard credit inquiries can occur when you apply for the following types of loans or credit:

  • Mortgage
  • Auto loan
  • Business loan
  • Personal loan
  • Student loan
  • Credit card

Conversely, soft credit inquiries (which will not negatively affect your credit score) can include a:

  • Background check for employment
  • Background check for renting an apartment
  • Credit prequalification

A soft credit inquiry can be made without your permission.

Tip #9: Become an Authorized User

Becoming an authorized user on someone else’s credit card account can improve your credit score. When you are an authorized user of a credit account, the account’s payment history appears on your credit report. If that payment history is positive, this could raise your credit score.

However, this strategy can backfire if the account holder doesn’t pay their bills on time. If the primary account holder does not make timely payments, these late payments will not only go on their credit report but also on yours!

Additionally, you will want to make sure that the cardholder you plan to partner up with does not have a high credit utilization ratio.

Bottom Line: If you are considering becoming an authorized user to help build your credit score, there can be some risks if the strategy does not go as you had planned. Therefore, be sure that the primary account holder has a history of making their payments on time, and that they don’t have a high credit card utilization rate.

Tip #10: Know Exactly Where You Stand – and Where You Want to Go

Knowing your credit score can help you with making smarter overall financial decisions, such as choosing credit products that can help you build or rebuild credit. It can also help you to keep your credit score in a higher range as you monitor your credit report for inaccuracies.

Being mindful of your credit score can allow you to predict with more accuracy whether or not a loan or a credit application will be approved and if you will be able to qualify for a lower interest rate when you borrow.

Where to Start With Improving Your Credit Score

Your credit score can take into consideration many years of your past bill-paying behavior. Even though credit score improvement isn’t likely to happen overnight, the sooner you start incorporating positive financial habits, the sooner you will see an increase in your credit score.

Bottom Line: Just like other important areas of your life, there isn’t a one-size-fits-all way to increase your credit score. Get started by taking a good look at your debt obligations, and develop a plan that works the best for your specific goals.

Final Thoughts

For most people, borrowing money and having good credit is a necessary part of life. Building a solid credit history and maintaining a high credit score is essential, and it can have a substantial impact on your overall financial life, both now and in the future.

At Upgraded Points, we offer a wide range of information about credit and tips on how you can take the steps you need for attaining and maintaining a good credit report. We also provide reviews on a variety of different credit cards so that you can determine which may be the best option(s) for you.

Frequently asked questions

What are the best way to improve your credit score?

There are many great ways to improve your credit score, but some of the best ways are to pay your bills on time, pay your balance in full (or as much as you possibly can), and to check for (and remove) incorrect data from your report.

Susan Wright

About Susan Wright

While writing about finance and insurance isn't something that keeps most people awake at night, it is what Susan Wright has focused on for more than 25 years. As a financial copywriter, Susan has an eye for money-related details such as credit and savings, and she loves to pass along helpful information to consumers. Susan holds 11 financial industry designations (including CLU, ChFC, RHU, REBC, ADPA, CITRMS, CIPA) as well as several licenses.

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  1. Dee. Migdal October 19, 2018

    I’m a Walmart Associate and I recently applied for a card to help my credit score go up. I was denied and even with a paycheck to take the payments out of. Seeing that I work there, I can’t understand why I was denied.


  2. Thank you for sharing this informative post about how to improve credit score rating. It had many views I haven’t thought about before. I didn’t know that it affects on the rating in a negative way if you have a big loan from one place compared to a mix of different kind of loans. That’s very good to know. These things have been in my mind more after my friend lost his credit score and it had to be repaired. That surely is a difficult situation but I’m glad he’s okay now.


  3. David Marco August 21, 2019

    I found this useful.


  4. Freddie Howard October 22, 2019

    I got a letter of credit card status that said that my payment will change from Wal-Mart to Capital One. I was delinquent in my card payment but I want to continue payment. What can I do?


    • Hi Freddie, if you are still able to make payments to your card (meaning it hasn’t been sent to collections/charged off), your best course of action would be to pay the maximum amount you can afford immediately. You can do this by scheduling a payment online or contacting the card issuer directly to set this up.

      If your card has gone into collections, it gets a bit more complicated. In short, the best way to tackle this would be to contact your original lender and negotiate a way for you to pay back your debt over time. By making payments, you can slowly start to rebuild your credit score. Hope this helps!


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