How to increase your credit scores in 10 steps

Building and maintaining good credit is one of the best things you can do for your financial well-being.

In addition to helping you secure low interest rates on loans, it can also make it easier to get approved for great credit card rewards and benefits, score lower rates on auto and homeowners insurance, get an edge on other prospective tenants when applying for a lease and more.

Understand how to increase your credit scores by learning about the factors that influence them and developing good credit habits. Here are 10 ways to improve your credit.

1. Pull your credit reports

Your credit scores provide a snapshot of your credit health based on information found in your credit reports. The best starting point is to review your reports and identify areas for improvement.

While you’re at it, watch out for potentially inaccurate or fraudulent information. If you find an account or a derogatory mark you don’t recognize, you have the right to file a dispute with the reporting credit bureau(s).

Next step: Visit AnnualCreditReport.com to get free weekly access to your credit reports from all three credit bureaus (Equifax, Experian and TransUnion).

2. Start monitoring your credit scores

As you work to increase your credit scores, track your progress through a credit monitoring service.

“A quarterly credit check-up is perfect for most people,” said Erica Sandberg, a consumer finance expert at BadCredit.org. But if you’re actively working on building your credit, you may want to check more often.

Keep in mind that not all credit monitoring services offer access to your FICO Score, which is the most widely used credit score among top lenders. While a VantageScore credit score looks at similar factors, they’re weighted differently so you won’t necessarily get an accurate view of what lenders will see.

Next step: Check with your bank or credit card company to see if it provides free access to your FICO Score. Several credit card issuers, including American Express, Bank of America, Barclaycard, Citi, Discover and Wells Fargo, offer customers free access to their FICO credit score. Alternatively, you can use other free credit monitoring services offered by Experian, Credit Karma or Credit Sesame, among other providers.

Additional reading: Learn more about how to check your credit scores for free and the factors that affect your scores. For your FICO Score, focusing on these factors can help you prioritize which steps to take:

Factor	Proportion of your FICO Score	Key detail
Payment history	35%	Late payments are typically reported 30 days after they’re due.
Amounts owed	30%	The most important element is your credit utilization rate, which shows how much of your available credit you’re using on credit cards.
Length of credit history	15%	This includes the ages of your oldest and newest credit accounts, along with the average age of all of your accounts.
New credit	10%	A single hard inquiry won’t impact your score much, but multiple inquiries in a short period can have a compounding effect.
Credit mix	10%	Your variety of different accounts should become more diverse over time; avoid borrowing money solely to improve this factor.

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3. Pay your bills on time

Your payment history is the most influential factor in your credit scores, so it’s crucial that you always pay your bills on time.

That includes certain bills that aren’t reported to the credit bureaus, such as rent, insurance premiums and utility payments. If you stop making payments, the provider could send the debt to collections, resulting in a negative mark in your credit file.

If you have past-due debts, including collection accounts, get caught up as quickly as possible to prevent further damage to your credit scores.

Next step: Consider setting up automatic payments or calendar reminders to ensure that you always pay by your due date.

Additional reading: Learn more about when to pay your credit card bill.

4. Pay down your account balances (and lower your credit utilization)

Paying off debt — particularly credit card debt — can positively impact your credit scores, especially if your credit utilization rate is high. While some credit experts recommend keeping your card balances below 30% of their credit limits, FICO has no hard-and-fast rule. The lower it is, the better.

What is your credit utilization ratio?
It’s the ratio of your total balances over your total available credit limit. So if your credit card statement closes with a balance of $1,500 and your total credit limit on that card is $10,000, your utilization ratio would be 15%.

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Keeping your utilization low can help boost your credit scores, as it shows lenders that you have sufficient credit to meet your needs and are considered less risky. A general rule of thumb is to stay under 10%, but counterintuitively, you may want to avoid keeping your cards with a zero balance at all times.

Expert’s take: “Oftentimes when running models to help borrowers improve their credit score, we find that very low utilization, such as 3% to 5% on a revolving credit line, results in a slightly higher overall score than zero utilization, as long as it’s paired with timely payments,” said Chris Hardiman, a mortgage loan officer at Guaranteed Rate.

Next step: Evaluate your debt situation to determine which steps you should take to tackle it. Options include making biweekly mortgage payments, using the debt snowball or avalanche method or applying for a debt consolidation loan. (Keep in mind that paying off a loan can potentially cause your credit scores to dip temporarily, but they should rebound, especially if you continue practicing good credit management overall.)

5. Get credit for rent payments

Fewer than 5% of tenants’ rent payments are reported to the credit bureaus, according to the Urban Institute. However, there are increasingly more ways to use your on-time rent payments to improve your credit scores.

In addition to asking your landlord to report your payments, you can also use a free third-party service, including:

• Self Financial will report your rent payments to all three credit bureaus.
• Experian Boost is another rent reporting tool that also includes utility, phone, insurance and streaming subscription payments, but it only adds those payments to your Experian credit file.

Next step: Talk to your landlord about potentially reporting rent payments. If that doesn’t work or you’d like to avoid that conversation, consider a free rent reporting service that can help.

6. Get added as an authorized user

One of the best ways to boost your length of credit history is to have a family member or friend with good credit scores add you as an authorized user on their credit card. This way, the card’s full history appears on your credit reports. The older the card is, the bigger the benefit to your account. In fact, arriving for your first day of college at 18 years old with a 25-plus year credit history is entirely possible thanks to this strategy.

Just make sure that the primary cardholder uses the account responsibly, including making payments on time and maintaining a low utilization rate.

If your benefactor is nervous about adding you to their credit accounts, remind them that as long as you’re added to the account, you don’t need possession of the physical card to benefit.

Next step: Talk to a parent or other loved one about potentially adding you as an authorized user on their account (which is not a joint credit card). Be sure to discuss how they use the account to avoid hurting your credit instead of helping it.

Related >> How old you have to be to get a credit card

7. Consider a debit-credit hybrid card

If you can’t get approved for a traditional credit card on your own, consider a debit-credit hybrid card instead. These cards typically don’t require a credit check and don’t charge interest, drawing your payments from a linked secured account balance you can regularly replenish. They also report your payments to the credit bureaus, helping you increase your credit scores over time.

“The downside to a card like this is that if you don’t have much cash in reserves, your charging limit may be insufficient for a large purchase,” said Sandberg.

Also, some of these cards may charge monthly or annual fees, and not all of them report to all three credit bureaus. Some of the best options include the Chime Credit Builder Secured Visa? Credit Card, the Varo Believe Card and the Extra Debit Card.

Next step: Shop around and compare debit-credit hybrid cards to find the right one for you.

8. Consider a credit-builder loan

Credit-builder loans can be a great way to build credit fast if your scores are low or you’re new to credit, but they function a little differently from traditional installment loans. Instead of receiving the loan proceeds upfront, they’re stashed in a savings account while you make monthly payments.

You’ll receive the loan funds once you’ve completed your repayment term, which can range from six to 24 months. Credit-builder loans typically offer lower interest rates than other bad-credit loans and can help diversify your credit mix.

Next step: Shop around and compare credit-builder loan options to determine whether it’s right for you and which lender can offer you the best deal.

Additional reading: Learn about collateral loans that may be easier to qualify for than unsecured personal loans — but include the risk of forfeiting an asset if you don’t repay the debt.

9. Keep old accounts open

One of the best ways to build credit is to show a long history of responsible credit management. While loans are closed upon payoff, you can generally keep credit cards open indefinitely. As such, it’s best to keep old credit cards open, even if you no longer use them regularly.

The only exceptions are if you’re having trouble with overspending and need to get rid of the temptation, or if it’s a secured credit card and you can’t get the deposit back without closing the account.

Next step: Identify your oldest accounts and develop a plan to keep them open. If the card has an annual fee and you no longer use it, check with your card issuer to see if you can downgrade it to a card with no annual fee. Additionally, consider putting a small recurring charge on the card to prevent it from being closed due to inactivity.

Related >> Does closing a credit card hurt your credit scores?

10. Avoid unnecessary credit inquiries

Each hard credit inquiry knocks up to five points off your credit scores, according to FICO. But if you have multiple inquiries within a short period, it could have a compounding effect.

If you’re thinking about getting a new credit card or loan, check for preapproval or pre-qualification tools that allow you to see your approval odds via a soft credit inquiry.

Hard inquiry	Soft inquiry
Typically performed when you formally apply for credit Remains on your credit reports for two years Can negatively impact your credit scores for up to 12 months	Typically performed by lenders during preapproval and pre-qualification Remains on your credit reports for two years Doesn’t impact your credit scores

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Next step: Before you apply for credit, think carefully about whether it’s necessary. Then, take steps to minimize the impact of credit inquiries. For example, if you’re applying for an auto loan, student loan or mortgage, complete your rate-shopping within a 14-day window to avoid multiple hard inquiries.

Additional reporting by Ethan Steinberg

Frequently asked questions (FAQs)