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How to Improve Your Credit Score

Improving your credit score is extremely important for financial stability but can be difficult for people who have no idea how to start. The best way to rebuild credit is to manage it carefully over time, however this is a lengthy process for anyone. The next thing to do is to repair your credit score, which can be done with the following steps.

1. Pay bills on time

Payment history is the most important part of credit scores from any of the top credit bureaus such as Experian, TransUnion, and Equifax. A history of prompt repayments shows the discipline that many lenders want to see to show that future debts will be repaid responsibly.

2. Keep credit utilization rate low

Your credit utilization rate (or ratio) is the amount of credit currently being used, divided by the amount of credit you have available. Put differently, it’s how much you currently owe, divided by your credit limit and is usually shown as a percentage.

You generally want to keep these rates low; if using FICO as your score of choice, the recommended utilization rate is under 30% but even lower is better. A lower credit utilization rate shows that you’re using less than your available credit. This is interpreted by credit scoring models as evidence that you’re doing a good job of finance and credit managing.

3. Leave old accounts open

After paying off credit card debts, many people are eager to close those accounts, but closing them may do more harm than good overall. Having an account with a long history and solid record of on time bill repayment will help you look more attractive to lenders and creditors because they show responsible habits.

Closing a credit card account can lower your credit score because you know have a lower maximum credit limit. If you have balances on other cards, your utilization rate will go up as well. Its better off to keep those cards with a $0 balance.

4. Take advantage of score-boosting programs

Since the number and the average age of credit accounts are both important to credit score, people with limited to no credit history are at a disadvantage. That is where programs Experian Boost, UltraFICO, Self, and Kikoff can help you build up your credit. Experian Boost allows you to connect online banking data and lets the credit bureau add bill payment histories to your credit report. UltraFICO lets you give permission for banking data (such as checking and savings accounts) be calculated with your report for your score.

Programs such as Self and Kickoff are credit builders that let you make small payments (from $2-$25) on a monthly payment plan. The history of the payments is reported to major credit bureaus monthly and you get most of your payments back at the end of the payment period.

5. Only apply for credit you need

A hard inquiry is pulled on your credit report every time you apply for a new line of credit. This type of inquiry lowers your score temporarily, but if you often apply to see if you get approved for the card, this can show lenders that you are taking on too much debt.

You should also refrain from applying for multiple credit cards within a brief time frame, or before taking out a large loan.


Your credit score won’t improve immediately, even if you follow all these steps to the letter. The best way to gain a better credit score is to develop good long-term credit habits, which is done by using the steps outlined above. Monitoring your credit is helpful as well; contrary to popular belief, checking your credit has very little effect on your credit score. Checking it every few months can help you understand how well you’re managing your credit and helps you see if there are any errors that need to be reported.

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