Whether you're struggling with past financial mistakes or looking to build credit fast, fixing your score is a major step toward financial freedom. With nearly three-quarters of Americans agreeing that more financial education would improve their finances, knowing where to find the resources you need to learn about and increase your credit score can be hard.
In this guide, we'll explore 13 proven strategies to raise your credit score, explain what actually works (and what doesn't), and give you the knowledge you need for long-term financial success.
1. Examine Your Credit Report for Errors
Effort: 1/5
Speed: 3/5
The first step to fix your credit score should always be to request a credit report from all three credit bureaus: Experian®, Transunion®, and Equifax®.
Examine these reports for names, inquiries, accounts, loans, addresses, or any information you don't recognize. If your score drops and you're unsure why, an honest mistake in a credit report, identity theft, or fraud could be the culprit. The sooner you find and report these discrepancies, the sooner you'll see improvements in your credit.
2. Dispute Credit Report Errors
Effort: 4/5
Speed: 2/5
Not all credit errors are fraud; some are honest mistakes from incorrect credit reporting. Look out for incorrect information like inaccurate reports of late payments or outdated marks. Review all your account information to ensure closed accounts aren't marked open. Then, gather evidence that your credit report has incorrect information, mailing it with a credit dispute letter to the credit reporting bureau where you found the credit report error.
3. Set Bills to Autopay
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Paying bills on time is a major contributor to earning a good credit score. If you struggle with this, set bills on autopay to ensure you always pay them on time. If you struggle with overspending, opening a separate debit account to cover these bills could be helpful.
4. Use a Low-Interest Loan To Pay Debts
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Speed: 4/5
If you have lingering high-interest credit card debt that's holding you back, it can be helpful to take out a personal loan with lower interest to pay it off. This can save the total money you spend on debt with lower interest, improve your credit mix, and reduce your credit utilization rate.
5. Lower Your Credit Utilization Rate
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Speed: 5/5
Credit utilization rate is how much a user charges to their credit account compared to their spending limit. For example, if someone owes $300 on a credit card with a spending limit of $1,000, their credit utilization rate is 30%. The ideal credit utilization rate is 30% or lower, so you might focus on achieving and maintaining this on each open account.
6. Request a Higher Spending Limit
Effort: 2/5
Speed: 3/5
If you can’t pay down your debts to achieve the ideal credit utilization rate, you might be able to request a higher spending limit. For example, if you owe $5,000 on a card with a $10,000 spending limit, the credit utilization rate is 50%—not ideal. However, if you can increase the spending limit to $15,000, your credit utilization rate drops to 33%.
Remember, this might be difficult without a consistent payment history for the credit card—you could get denied. Each request also requires a "soft pull," but shouldn’t impact your credit.
7. Prioritize Paying High-Interest Debts
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Speed: 3/5
If you are struggling with a large amount of high-interest debt, you might want to try the "avalanche method" to pay down debts. For this method, you would first pay the monthly minimum for each credit card. With your remaining funds, pay as much as you can on any debt with the highest interest rate.
This strategy aims to reduce how much you're paying for your debt via interest to make paying down debts more manageable.
8. Diversify Your Credit Mix
Effort: 3/5
Speed: 2/5
Credit reporting bureaus often like to see a diverse credit mix. The two main types of debt are installment credit, like student loans, and revolving credit, like credit cards. If you can make regular payments on different types of loans like mortgages, credit cards, auto loans, lines of credit, or personal loans, this can help fix your credit score.
9. Pay Any Past-Due Debts
Effort: 5/5
Speed: 4/5
Past-due debts can stay on your credit report for up to seven years. Always pay these debts first because the longer they're past due, the longer they can pull down your credit score.
If you have bills in collections, always call the collector first and try to negotiate a pay-for-delete. If they agree and you can pay the collection amount, they will remove the negative mark from your report.
10. Pay Credit Bills Early
Effort: 2/5
Speed: 3/5
Pay off some of each credit card before the closing date each month. Creditors report your balance on the closing date each month, so if you make a payment before then, your reported balances for each card will be lower.
11. Get a Credit-Builder Loan
Effort: 3/5
Speed: 1/5
Credit-builder loans can be helpful for individuals who don't have a lot of credit history. With this type of loan, your borrowed money is held in a secured savings account, earning interest as you pay it off and building a credit history. At the end of the loan term, your lender will deduct their fees and return the funds from the savings account, plus interest.
12. Become An Authorized User
Effort: 1/5
Speed: 4/5
If you have trusted friends and family with healthy borrowing habits, you might be able to become an authorized user on one of their accounts. This adds the authorized account history to your credit report and can improve your score if the account has a good payment history.
You don't need to actively use the credit account to gain these benefits, so you may ask the account owner to withhold the card and card information so you're not tempted to overuse it.
13. Consult a Professional
Effort: 2/5
Speed: 3/5
A professional can help you on your credit repair journey. They'll review your credit history and help create a customized plan to fix your credit. They can also help dispute report errors, spot fraud, and negotiate with creditors on your behalf.
Complete credit repair is never guaranteed, but the support from a professional can be invaluable. Here's what to look for:
- No guaranteed results: Professionals can't make these promises, which could be a red flag that their service encourages questionable practices.
- Process transparency: Professionals should always be clear about their recommendations for your situation and explain their reasoning.
- Payment transparency: Read all the fine print to avoid surprise fees.
What About a Consumer Statement?
Consumer statements are short personal statements users can add to their credit report if extenuating circumstances like health or employment status negatively affected their score. A consumer statement is usually a paragraph long and should include:
- Brief description of the situation
- When the situation occurred
- Any action taken to remedy the situation
- Any action taken to prevent the situation from recurring
These statements generally stay on your report for 10 years. A consumer statement doesn't affect your credit score, but it can improve your chances of getting a loan with a lower credit score.
5 Don'ts and What To Do Instead
Dealing with a low credit score can be very stressful, so it's important to act rationally and avoid these common mistakes:
Final Thoughts on Fixing Your Credit Score
Taking control of your credit doesn't have to be overwhelming. Ready to transform your financial future? Get your free credit report card to start your credit repair journey.
FAQ
Is it true that after seven years your credit is clear?
Negative items, such as unpaid debts, fall off your credit report after seven years. However, you'll still need to pay that debt and likely take other action to improve your credit score.
How can you fix your credit with no money?
Some free and effective ways to fix your credit include reporting errors on your credit report, ensuring you pay bills on time, and avoiding applying for new credit.
How can you build credit fast?
Some fast ways to build credit include using a credit-builder loan, becoming an authorized user on another account, or using a secured credit card.
How long does it take to fix a credit score?
Fixing a credit score can take anywhere from a couple of months to a couple of years. This depends on factors such as the reason for the low score or what actions you take to improve the score.
