How to Improve Your Credit Score: 9 Practical Steps

By: Rita Cunha | October 19th, 2021

Having a good credit score is an important mark of adulthood. Not only will it help you get approved for loans, but you will also enjoy lower interest rates. But you don’t have to be a personal finance genius to know how to improve your credit score. These 9 simple practical steps can help you boost your FICO score—and you can get started today.

Here’s How Credit Scores Are Calculated

Credit scores judge how responsible you are with your finances by looking at your credit history and credit reports. Here’s how your FICO score is calculated:

  • Payment history (35%): It’s good to always pay your bills on time.
  • Credit usage (30%): The higher your credit card balances (meaning, the amount you owe), the lower your score will be.
  • Age of credit accounts (15%): It pays off to keep lines of credit active for several years.
  • Credit mix (10%): Having a good credit mix of cards and installment loans raises your score.
  • New credit inquiries (10%): Several hard inquiries (for example, to open new accounts) in a short amount of time will tank your score.

As you can see, the most important factors are staying on top of your bills and keeping your credit utilization ratio low. Now that you know what goes into a FICO score, you can start improving yours.

How to Raise Your Credit Score in 30 Days

Follow these 9 ways to improve your credit score for noticeable results.

1. Pull Up a New Credit Report

First things first, you need a credit report to understand your credit history. It will show you your score, how many credit accounts are under your name, and a lot more.

ExtraCredit lets you check your credit report for free online. Look at how old your credit history is, how much you’re using your credit card, and how timely you are with your payments. The best thing about this thorough report is how reliable and accurate it is. Because it pulls information from major credit bureaus (unlike what most free credit score tools do), the score you see on ExtraCredit is what lenders use.

Once you know where your finances stand, you can move on to the next steps and fix your credit score.

2. Dispute Any Errors You Spot

If you spot any mistakes on your credit report (such as a card you didn’t sign up for) and dispute it immediately. Call your card issuer to get it figured out. This small step could increase your credit score almost overnight.

3. Focus on Paying Off Debt

Next, tackle bad credit. You can see what loans you’ve taken out when you review your credit. If you have debt on credit cards or high-interest student loans, make payments on those first. Debt can hinder your credit for up to seven years, but you’ll be rewarded for finally paying those off.

4. Pay Your Bills on Time

As you now know, payment history is the most important factor for calculating credit scores. Paying your bills on time and avoiding late payments is the fastest way to build credit.

The best way to ensure you are never behind on your bills is to set up automatic payments. On a specific day every month, money from your checking account will pay off your credit card balances. This way, you don’t have to remember on your own that you need to make payments. Just be careful not to overdraft your account.

5. Make Your Rent and Utility Payments Count

Did you know that your rent and utility payments don’t count toward most people’s credit scores? Sadly, your credit report won’t show how responsible you are, even though you’re consistently meeting deadlines.

Fortunately, there’s an easy fix for that. ExtraCredit reports your on-time payments as credit tradelines. This way, you’re rewarded for being a money-conscious and reliable tenant and your credit score may go up. If you’re looking to quickly build up credit, this is a step you shouldn’t skip.

6. Bring Down Your Credit Utilization Ratio

You can raise your credit score if you lower your credit utilization ratio. Confusing? It’s easy. Say you have three credit cards, each with an available credit limit of $1,000. On average, let’s say you use $750 between all cards. That means your credit utilization rate is 0.25 ($750 divided by $3,000)—or 25%. Financial planners advise that you keep your ratio under 30%.

If you’re consistently over that 30% recommended limit, your credit report will take a hit. The easiest fix is to simply pay off your revolving credit throughout the month, so your credit card balance never gets too high. So, for example, pay off your Black Friday 2021 purchases as you make them.

7. Ask for a Credit Limit Increase

Alternatively, you can lower your credit utilization rate by asking your card issuer to raise your credit limit. Think about it: if the amount you can borrow goes up, but your spending stays the same, your ratio will go down. Thus, your credit scores improve.

If your income has gone up recently or you’ve had a good credit score for a few years now, call your credit card issuer. They may be able to increase your limits right then and there, no hard inquiries required.

8. Don’t Apply for New Credit Lines

While improving your credit, you want to avoid hard inquiries. Financial institutions run these every time you apply for new credit cards and loans. Too many hard inquiries will have a negative impact on your credit. It makes sense, really: if you’re applying for new lines of credit, money must be tight, right?

9. Reach Out for Help If You Need It

If you’ve done all these steps but still couldn’t improve your credit score, don’t give up. There are professionals who can help your credit score go up (and even repair it, if it’s in really bad shape).

These services aren’t as expensive as you may think. When you sign up for ExtraCredit, you also get access to one of the most trustworthy credit repair companies in the United States—at a fraction of the normal price. Through this service, you can raise your credit score by 40 points or more and finally get access to favorable loans.

Bonus: Join a Credit Line as an Authorized User

If you have little to no credit history, it’s time to start now. You could get a secured credit card on your own, but that may be too expensive for your budget. A simple tip is to join existing credit card accounts as an authorized user.

Say you’ve just moved to the United States to live with your partner. If they already have a good score, you can become part of their credit card account. You’ll get your own card and, together with your partner, pay off the balance like normal. Do this consistently and you will get a FICO score in as little as six months. Of course, if your partner stops paying their dues, your credit score will also suffer.

Improving Your Credit Score Is Far From Impossible

Now that you’ve read our tips for improving your credit score, what steps will you take first? Remember, it may take a while for you to see the fruits of your labor, but you’ll get there—especially if you take full advantage of online credit-boosting tools

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