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How Do I Increase My Credit Score?

By Jason Ramin

When it comes to your financial life, your credit score is one of the most important numbers to be aware of and working on to improve. Depending on where you are personally at with your finances, increasing your credit score may seem impossible. Actually, even if you have really good habits when it comes to staying on top of your payments, it’s still pretty difficult to raise your credit score.

However, there are things you can consistently do to keep your score good, just as there are things you can change to improve a bad score. So whether you need to improve a bad score or keep your good score, well, good, the following tips and guidelines on how to increase your credit score are for you.

Got Credit?

Do you have a credit card? This might seem like a no-brainer, but everyone has credit, whether they have a credit card or not. And it also might seem counterintuitive, but not having a credit card is actually detrimental to your score.

Good credit is established as you build trust by making regular payments. If you don’t have a credit card, you can’t make regular payments, and your credit score isn’t going to improve.

Create a Plan and Stick to It

If you’re just getting started on making payments on a credit card, or if you’re trying to dig yourself out of a bad credit hole, this bit of advice is for you. Make a plan and stick to it. Start from wherever you are.

This plan can be anything from deciding how much you’ll use your credit card each month to what types of purchases you’ll make with it. If you know you’re going to need to make a big purchase, plan ahead and see if you can pay off the card payment with your funds. Or only make payments on your card that you know you have the funds to cover.

Check Your Credit Reports

This is another first great step to take when trying to improve your credit score. How can you expect to improve your credit without knowing what point you’re starting from? Everyone is entitled to a yearly free copy of their credit reports.

You can find these credit reports at AnnualCreditReport.com. Credit scores are based on this tier system:

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

Keep the following in mind when you’re going over your credit reports:

  • How does your personal information look? Is everything correct?
  • Do all of your credit accounts show up on the report?
  • What about any accounts you don’t recognize?
  • Are there missed or late payments showing up that you know you paid on time?

Manage Your Bill Payments Responsibly

Pay your bills on time. This is one of the most basic ways to increase credit scores. A credit score is calculated by scoring models, so in reality, you have multiple credit scores just by virtue of the variety of scoring models. But that’s not something you need to worry about.

The factors that go into determining your credit score include things like your payment history on credit cards and loans, how long you’ve had accounts open (the types of accounts and how regularly you apply for new credit), and how much of your revolving credit you use consistently.

Fix Late Payments

In the spirit of controlling what you can control when it comes to your credit score, fixing late payments is a great place to start. Don’t make the mistake of thinking closing your account will get rid of your debt. It won’t.

In this instance, the best—and really only—way to get out of the hole is the slow and steady way: pay off your late payments.

Reduce Debt and Keep Balances Low

As you do your best to make steady, consistent payments, you’ll gradually reduce any outstanding debt you may have. This will reduce your overall balances due and keep your average credit utilization ratio low.

The lower your average credit utilization ratio, the better. Your average credit utilization ratio is calculated by adding all credit card balances up and dividing that number by your own total credit limit. Lenders like to see lower numbers because that typically indicates you manage your money and payments well.

Don’t Close Accounts

Like we mentioned before, closing any accounts you have won’t make debts go away. Even if it’s an old account that you’ve never used, closing it is a bad idea. Closing an account could potentially raise your credit utilization ratio.


If you have any questions or concerns about the loan request process, Personal Loans can provide you with more information.