The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
The short answer to the question of “how can I help my credit score” is the following: through responsible credit management. That’s what credit-scoring models want to see. This means that you should always pay your bills on time, be sure to keep your revolving (credit card) debt respectable, and don’t shop excessively for credit.
Here’s the longer answer:
Some of us have bad credit and need to rebuild it. Some of us have no credit and need to establish it. And some of us have great credit and need to maintain it. Follow the the 10 steps outlined below, and you’ll be well on your way to better credit reports and higher credit scores:
The worst thing you can do with your credit is to ignore it or avoid it. It’s like trying to put a roof on a house that has no framing; it’s simply not going to work. So the purpose of following this first step is to find out everything there is to know about your credit reports and scores. Then you can build your action plan for the future.
You can find out this information by getting copies of free annual credit reports directly from the credit reporting agencies. These free annual credit reports do not include any of your credit scores for free. You can, however, use Credit.com’s free Credit Report Card to get your credit scores, to see where you stand compared to national averages, and for a clear breakdown of the information in your credit report.
Note: Checking your own credit data online will not harm your credit scores. This is a very common misconception. The credit-damaging “hard inquiries” only occur when a lender or creditor checks your credit for the purpose of processing a credit application. You can check your own credit as often as you would like without harming your credit scores.
Everyone should do this at least once every few months. This step isn’t going to be as easy as it should be. Credit reports can be confusing, especially if you aren’t used to reviewing yours. They can be dozens of pages long and contain unfamiliar codes and terms. But recent enhancements to online consumer credit report formats have made it a bit easier to sort through your data. Once you have your report, you will need to do the following:
If you have bad credit, it’s very likely that you have negative information on your credit reports. Such information could include late payments, collections, tax liens, judgments, repossessions, foreclosures, settlements and even bankruptcy. All of these things will hurt your credit scores.
Credit scores are calculated by applying a complex mathematical formula to almost all of the data on your credit reports. Credit scores pay special attention to the negative records that have occurred in the recent past, specifically things that were reported in the past 12 to 24 months. Since these are considered to be “recent” negative items, they will have a more drastic impact than items that are much older.
What this means to you is that you can start helping your credit if you make it a priority to stop doing things that continue to cause these negative items to be reported on your credit reports. Sure, you’ll pay the price as long as the negative items are in your files, but they do lose their negative impact the older they get, as long as you don’t cause new bad information to appear.
Credit scoring models love to see positive information on your credit reports, especially if you have low credit scores. Therefore, if you have low scores, one of the best ways to boost them is to give the scoring model something else to focus on – a positive distraction. In the case of bad credit, you absolutely need to manage your money better, cleaner, and more responsibly than ever before.
It may even take opening a few new accounts for the specific purpose of paying them on time and managing them responsibly in order to start improving your credit scores. Remember: What happened in the past 12 to 24 months is very important to your scores. If you can show responsible credit management for the next 12 to 24 months, eventually that will become the past 12 to 24 months and the credit scoring models will reward you because of it.
There’s a reason why your credit scores are what they are. It’s not an accident that your scores are good, average or bad. One key to improving your credit is to have an understanding of what is impacting your credit scores. Many online credit scores include a brief analysis of the factors that are causing your credit scores to be higher or lower. These factors can help point you in the right direction.
One of the reasons that people are often so confused about their scores is that they don’t understand how much certain things count. Here’s the breakdown:
This step is specifically for people who have FICO scores higher than 750. First off, congratulations on your great scores! The bottom line is that with a score of 750 lenders see you as golden and you’re likely to get their best offers.
You’d be surprised at how many people think that a score of 750 needs help. There’s no need to try and raise your 750, but there is a need to maintain it. In fact, you’re more likely to lower your great scores by trying unproven, unwise and unnecessary strategies than you are to help them, and that’s the last thing we want to happen. Think about it this way: It’s a whole lot easier to lower a 750 than it is to boost it. So, be happy and enjoy your excellent scores. Focus on what it takes to maintain them rather than boost them.
If during Step 1 you realize that things aren’t exactly how you wanted (or expected) them to be, don’t panic. The worst thing you can do is start closing accounts or opening accounts or transferring balances just because you think it’s the right thing to do. In most cases, it’s best to proceed with caution. And be very careful with the advice you get during your credit journey. The majority of people are misinformed about credit reporting or credit scoring. The worst thing you can do is get yourself into a deeper hole by listening to someone who isn’t giving you good advice.
There is an entire industry of scam artists out there preying on people with bad credit. These so-called credit repair companies offer services promising to clean up the negative information on your credit reports. Fees range anywhere from $39 to hundreds of dollars per month. Essentially all these companies do is send dispute letters to the credit bureaus disputing negative (but accurate) credit information on your credit reports. Save your money and avoid these expensive, ineffective and often illegal programs.
There is no quick, easy or inexpensive way to rebuild your credit. If you have negative records such as collection accounts, judgments, bankruptcy filings or liens, there is often not much you can do about those records while you wait for them to expire after seven to ten years. That certainly doesn’t mean that you can’t get credit, but lenders will be cautious about lending you money or giving you one of their credit cards. And those that do choose to do credit-related business with you will treat you like a high-risk borrower. That means higher interest rates and fees, as well as lower credit limits … and in some cases, decline letters.
Next, you’re going to probably have to endure some secured credit cards for a while. This type of credit card is actually a great way to rebuild your credit. You give a lender a cash deposit and the lender issues you a credit card secured with a credit limit of the same amount. If you default on your account, the creditor has a safety net of collateral to fall back on. Secured credit card issuers charge fees and have very high interest rates. That’s their way of making money when doing business with a high-risk consumer. You don’t want to do business with them forever, but they are a good place to re-start your credit history.
And lastly, if you are thinking of buying a house or a car or anything else that’s expensive, really think hard before you do it. Paying 15% on a home loan is painful, just like paying 29% on a car loan is painful. We all need a way to get around and we also need a place to sleep, but as soon as your scores rise to, say, the mid-600s, you should think about refinancing and getting out of those ridiculous interest rates.
After several years (not 12 months), your credit scores should allow you to re-enter the world of “prime” borrowing. That’s assuming that you’ve rebuilt your credit reports and credit scores by establishing new accounts and managing them responsibly.
Image: Zoonar
March 7, 2023
Credit Score
January 4, 2021
Credit Score
September 29, 2020
Credit Score