7 Ways to Improve Your Credit Score

Improve Your Credit Score

A Facebook fan asked us to share ways to improve credit scores. There are lots of people with low credit scores. FICO (Fair Isaac Corporation), which is the most commonly used credit score, uses a point scale from 300 to 850. The average credit score in the U.S. is 636 and the median score at 723. With the average score below the median, this means that the scores below the median are so low that they pull the average way down. It’s math and, as John would say, “hurts my head.” Simply said, there are more bad scores than good scores.

We have seven suggestions that will help improve credit scores for those in the majority. If you must improve your credit score, we suggest you do each of these in the order they are presented, as the former will provide more immediate benefits than the latter.

1.  Close most of your credit cards

The average American has 3.7 credit cards. This is a risk because you could over-leverage yourself. Close your newest cards and all retail cards, such as Gap, Macy’s, Nordstrom, etc.

There are two goals with this exercise: 1) move all credit balances to a couple of the credit cards with the longest histories because longer credit histories increase credit scores. 2) reduce the temptation to shop on credit.

2.  Lower your credit utilization ratio

Use less than 50 percent of your available credit. Banks consider borrowers who use less than 50 percent of the credit available to them as a better risk. Get your overall credit card balance below 50 percent of your available limit and your credit score will improve. This will require you to come up with a pay off schedule.

Another tactic to consider is a balance transfer to a zero interest card. Then, what used to go toward monthly service fees can be used to pay down your balance. Beware of transfer fees. Ensure that your transfer fees aren’t greater than what you’ll save on monthly fees. Transferring small balances is not worth it. Do the math.

3.  Clean your credit report

Because of identity theft or because of human/computer error, you may have negative marks on your credit report that aren’t yours. Remove these errors and you’ll see immediate improvements. Visit www.AnnualCreditReport.com or call 1-877-322-8228 annually to get copies of your credit reports from all three credit agencies (Equifax, TransUnion and Experian), analyze them for accuracy and contest errors, including misspelled names, incorrect addresses and false claims.  It will take time to receive your reports and file corrections, but it’s worth it. For some guided help cleaning up errors on your credit report, contact our partner CreditRepair.com.


You may, also, find items that you weren’t aware of or forgot about, such as collection attempts or past due charges. Address these and your score will improve. Be careful, though. If you have a history of collection attempts, you may open the floodgates of debt collector phone calls. Proceed with caution.

4.  Pay your bills on time

The majority (35 percent) of what affects a credit score is payment habits. Good payment habits show banks that you’re creditworthy, so pay all bills on time.

To simplify this, automate bill payments for as many of your bills as possible. Most online bank accounts offer bill payment features. Open one of these accounts, have your paycheck direct deposited into this account and pay all your bills each payday. As we say “Send it before you spend it.” When the money is out of sight you won’t unconsciously spend it.

You can, also, pay off your credit cards more quickly if you continue to pay today’s minimum balance or more even as your minimum balance due decreases over time.

5.  Get a gas station credit card

Gas station credit cards can only be used at gas stations and you need gas anyway. Use this card to pay for the gas you already buy and pay it off each month. If it’s easier to pay it off more frequently, do so. This will establish a good credit history fast. Be careful to never use your gas station credit card to buy food or other items at the gas station.

6.  Don’t apply for anymore credit

Don’t open a new credit card account, apply for a loan, get a new apartment or any other activity that will cause your credit to be checked for at least a year. This tells banks that you are responsible and can cover your expenses. It seems bass-ackwards, but banks want customers who don’t need banks. These customers are a better risk that keeps the bank’s costs low and profits high.

7.  Get a secured credit card

After your year-long credit card application moratorium, open a secured credit card account, use it once a month and pay it off immediately. Although the fees may be high, this will help to improve your credit history.

Almost anyone can repair or improve their credit score. The best way is to demonstrate that you are a worthy borrower. Pay your bills on time and don’t overextend yourself. This advice is the most efficient way to improve your credit score and make you #MoneyConscious in no time.

Good luck! Let us know if you have any questions. We’d love to hear your comments and feedback.

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Comment List

  • Tre 23 / 06 / 2014 Reply

    You also need time and patience. Your score won’t improve overnight.

    • John Schneider 25 / 06 / 2014 Reply

      Absolutely true!

    • John Schneider 26 / 06 / 2014 Reply

      Exactly Tre! It takes time, but you can start seeing progress in as little as a few months. Maybe not a huge jump up, but progress can be fun to watch.

  • Mrs Lewis 14 / 01 / 2016 Reply

    I don’t often hear being added as an authorized user to someone else’s credit card as a suggestion. Is there much information on the effects of this process? If I’m an authorized user on say my dad’s accounts and he has a 850 score, how could that translate back to me?

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