Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff. Learn more.
Credit scores influence almost every aspect of your financial life. If your score is low, you could get declined for housing, loans, insurance, jobs, and more. And if you do get approved, you could pay higher rates or owe a larger security deposit.
Many people are unsure about how to improve their credit score. These steps show how to boost your credit so you can get approved and qualify for the best deals.
15 steps to improve your credit scores
While improving your credit score can seem like a daunting task, it is quite simple to do. Follow these steps to increase yours before your next application.
1. Dispute items on your credit report
A 2013 study by the Federal Trade Commission (FTC) found that approximately one out of every four people had a mistake on their credit report that could impact their credit score. Under federal law, consumers are entitled to one free credit report from each of the three major credit bureaus each year. Visit AnnualCreditReport.com to request your free credit report from Experian, Equifax, and TransUnion.
Review your credit reports and, if you spot errors and negative entries, dispute them. Creditors generally have 30 days—45 in some cases—to validate your debt to the credit bureau or it must be removed.
2. Make all payments on time
Payment history is the single biggest factor in your credit score. It determines 35% of your score, so making payments on time has a large impact. If you miss a payment, the negative mark on your credit can last for seven years.
To ensure that you don’t miss a payment, set up automatic payments for the minimum amount on all of your debts. By making all payments on time, you avoid late fees, penalty APRs, and negative marks on your credit. Over time, your positive payment history will continue to improve your credit score.
3. Avoid unnecessary credit inquiries
Every time you apply for credit, your score may drop three to five points. While this impact is temporary, it could mean the difference between an approval or decline. Generally, hard credit inquiries stay on your credit report for up to two years. However, they only affect your score for 12 months.
4. Apply for a new credit card
Opening a new credit card can actually increase your credit score. With the new credit line, your credit utilization goes down because of the increase in your overall credit limit.
The utilization ratio is the amount of revolving credit you’re using divided by your credit limit. .For example, if you owe $5,000 and have a $10,000 credit limit, you have a 50% utilization ratio. Adding a new card with a $10,000 limit increases your overall credit limit to $20,000 and reduces your utilization ratio to 25%. You should keep the ratio, which is responsible for 30% of your credit score, below 30%.
5. Increase your credit card limit
If you’ve been using your credit responsibly, your bank may approve you for an increase in your credit limit. Getting an increase in your existing credit limit also reduces your utilization ratio. Depending on the bank, requesting an increase could trigger a hard inquiry or a soft inquiry. If it’s a soft inquiry, you’ll avoid a temporary dip in your credit score.
6. Pay down your credit card balances
Many consumers think you need to carry a balance to improve your credit score. In reality, it’s better to borrow less.
Paying down your credit card balances reduces your credit utilization and increases your credit score. When it comes to credit utilization, you’re rewarded for having a lower number. A general rule is to keep your total utilization of available credit below 30%. You’ll get even more benefits if you can reduce your balances below 10%.
Most banks report your balance on the statement closing date. Even if you pay your statement balance in full each month, your credit report may still reflect a balance. To boost your credit score even further, consider paying your card down to a zero balance (or at least pay extra) before the statement date.
7. Consolidate credit card debt with a term loan
You can dramatically reduce your credit utilization ratio, a key component of your credit score, with a consolidation loan. You'll start by paying off your credit card balances with that loan. Then, you should avoid using your credit cards and switch to a cash-only budget. But, do not close your credit cards. Then, you'll be debt-free at the end of the loan term.
This improves your credit score in multiple ways. Paying off your credit card balances reduces your utilization to 0% and keeping the credit cards open ensures a low utilization ratio if you need to use a card in an emergency. You'll add to your payment history by making all of your loan payments on time. Plus, you'll retain the highest possible average age of credit by keeping all your accounts open.
8. Become an authorized user
Many credit cards allow cardholders to add authorized users to their accounts. In most cases, adding an authorized user does not cost anything, but some cards do charge an annual fee. When you're added as an authorized user of a card that has been open for a while and has a positive payment history and credit utilization, your own credit score can increase.An authorized user is not an owner of the account. They can use the card to make purchases, but are not legally responsible for making payments.
Most banks do not require a hard credit pull before adding an authorized user. However, be careful whose credit card you are added to. If it’s a card with a record of late payments, high utilization, and so on, being added to it can negatively impact your credit score.
9. Keep your oldest accounts open
Another important factor is the average age of accounts. Evidence that you can keep an account in good standing over long periods of time influences 15% of your credit score. Keep your oldest accounts open to capitalize on this.
Another option is closing newer accounts. Closing a newer account can increase your average age of accounts and boost your credit score.
10. Open self-lender loan
Self-lender loans are a form of lending without actually borrowing any money. They improve your credit score by reporting on-time payments each month to the credit bureaus as you work toward a deposit goal. These loans typically do not charge any interest, but they may charge a monthly fee.
For example, if you sign up for a $300 self-lender loan, you’ll pay $25 per month (plus fees) for one year. Then, at the end of the year when you’ve made all of the payments on time, you’ll receive a check or direct deposit for the $300.
11. Apply for a secured loan
A secured loan is another option to boost your credit. These loans are easier to get than a personal loan because they are secured by an asset. CDs, investments, and other assets can be used as collateral for the loan.
When you are approved for a secured loan, you’ll receive a lump sum of cash. You’ll make monthly payments according to the payment schedule, which includes both principal and interest charges. After making all of your payments, you’ll have a zero balance and a history of on-time payments.
12. Sign up for Experian Boost
Many consumers make regular on-time monthly payments for rent, subscriptions, cellphones, and more. However, these payments aren’t traditionally reported to the credit bureaus. With Experian Boost, you’ll get recognized for those payments and improve your credit score.
13. Have rent payments reported to credit bureaus
While homeowners have their monthly mortgage payments reported to the credit bureaus, renters typically don’t receive this benefit. Some landlords offer this service for free or a small fee. If your landlord doesn’t offer this service, there are third-party companies that do.
These third-party companies report your rent payments to the credit bureaus in exchange for a monthly fee. Depending on which company you sign up with, they can obtain the information from your landlord or from your bank statements. In some cases, they’ll also report historical payments up to 24 months in the past. This additional payment history can provide an extra boost to your credit score.
14. Switching to an all-cash budget
Consumers can avoid debt by switching to an all-cash budget. This prevents them from accumulating more debt and allows them to apply extra cash toward reducing their balances. When you pay down your balances, your utilization ratio declines and your credit score improves. A smaller balance also reduces the interest charged by the card issuers, which gives you extra cash to pay down your debt.
15. Build credit through a debit card
Carrying around a wad of cash is risky. You may lose the money or become a target for thieves. Many people who switch to a cash budget use debit cards instead of credit cards. Debit cards provide all the convenience of a credit card, including making large purchases, online transactions, and speedy checkout in stores. However, they don’t increase your debt load.
Most banks don't report your debit card usage to the credit bureaus, so using their debit cards won't build your credit directly. There are exceptions, though. FinTech banks now offer debit cards that do build credit. They reward you for using their debit cards and keeping a positive balance in your checking account.
The Extra Debit Card helps customers improve their credit score by an average of 48 points. Every time you swipe your Extra Debit Card, it spots you the cash, then withdraws it from your linked bank account the next day. All of your purchases throughout the month are added up, then Extra reports that total to the three major credit bureaus.
For a higher fee, customers can also earn up to 1% in points on everyday purchases to use in Extra's rewards store or on Apple products. Memberships start at $20 per month, but you can save over 30% by paying annually.
Why does a good credit score matter?
A good credit score is essential in today's economy. Credit scores affect not only your ability to get a loan or what interest rate you'll pay, but also your insurance rates, job applications, and more.
- Getting approved for credit. Many loan programs and credit cards have minimum credit scores in order to get approved.
- Higher interest rates and fees. When you have a lower credit score, the lender sees you as a bigger default risk. It will charge higher interest rates and fees to compensate for that risk.
- Larger security deposits. Landlords, cell-phone companies, utilities, and other providers may require larger security deposits before they'll do business with someone with bad credit.
- Renting a home. A landlord may not approve someone with a low credit score or negative marks on their credit. Even if your credit score qualifies, negative marks created by past events like bankruptcy, foreclosure, collections, or eviction can disqualify your application.
- Insurance premiums. Some insurance companies charge higher rates to customers with bad credit. This can affect your auto, life, homeowners, renters, and other insurance premiums.
- Job applications. Some job categories or professional licenses require you to maintain good credit. Bad credit can also affect security clearance for military and government jobs or for civilians working with the government.
How long does it take to rebuild a credit score?
The timeframe to rebuild your credit score depends on what your score was before, how low your score is now, and what's causing the low score. In general, the higher your score before the setback occurs, the longer it takes to fully recover.
Here are a few scenarios showcasing the length of time it takes to rebuild your credit.
- Missed payment. A late payment can stay on your credit report for up to seven years. However, your credit score should recover in about 18 months if you make all of your other payments on time.
- Maxing out a credit card. Your credit utilization ratio can change rapidly, and its impact on your credit score moves almost as quickly. By paying off the balance (or at least bringing it back to where it was before), your score should recover shortly after the card issuer's next update to the credit bureaus.
- Filing for bankruptcy. Filing for bankruptcy has one of the most devastating impacts. It stays on your credit for seven to 10 years. While your credit score improves over time with responsible behavior, it can take just as long for your score to recover.
Time Stamp: You really can improve your credit score
Having a good credit score enables you to qualify for the best rates and terms on loans and credit cards. It also helps to get hired in certain industries and can keep your insurance rates down.
You can improve your credit score quickly by following these 15 simple steps and being mindful about spending. Even if you aren't able to do all of these tips at once, choosing one at a time puts you on the path toward a higher credit score.
Frequently asked questions (FAQs)
How can I raise my credit score in 30 days?
To quickly raise your score within 30 days, follow the steps in this article. Tips include disputing negative and erroneous information in your credit report, paying down your credit card debt, and signing up for Experian Boost.
How do I get a 700 credit score in two months?
Getting a 700 credit score quickly requires focused action. Start with the following:
- Dispute errors and negative marks on your credit report.
- Continue making all of your payments on time and avoid applying for new credit.
- Reduce your credit card balances by paying them off or getting a consolidation loan.
- Keep old credit cards open after paying them off.
What is the #1 way to improve your credit score?
The number one way to improve your credit score is to reduce your credit utilization. You can accomplish this by paying down your credit cards, increasing your credit limits, or transferring your balance with a consolidation loan.
How do I get a 720 credit score in 6 months?
To improve your credit score to 720 in six months, follow these steps:
- Review your credit report to dispute errors and identify areas for improvement.
- Make all payments on time and avoid applying for new credit.
- Lower your utilization ratio by paying down balances, increasing credit limits, or consolidating your debt.
- Become an authorized user on an account with a long history of responsible use.
The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.