In this article we explain the steps you can take to improve your credit score. A good credit score is very important to get loans with lower interest rates or any loan at all. If you have a low credit score, there are steps you can take for your credit score to improve or even boost. Some of these steps can lead up to an immediate increase or your credit score.

How do I improve my credit score

What is my credit score?

Your credit score is a three-digit number used by financial institutions and other lenders to decide your creditworthiness. If you have a low or a bad credit score which disqualifies you from accessing loans, you may want to improve your credit score, a process that can take some time.

  • First, check your credit score online and know factors that are making your credit score poor.
  • Checking your credit score is for free and there are many websites you can use for this purpose. See for example and Credit Sesame. You can also receive your credit score through your bank.
  • Among the factors that affect credit score, most include payment history and credit utilization ratios.

On time payment of bills

Debts paid late for the last seven years can result in bad credit score. If you want to improve credit score, make sure you pay debts first before meeting other utilities. You can use automatic payment calendar reminders to make sure you do not forget to pay your bills.

Lenders are very interested in knowing how reliable you can be when it comes to paying bills, especially bills related to your existing debts. This is because past performance is a good prediction of your ability to pay your future bills.

  • To improve your credit score, start paying your bills on time before the due date. Paying after the due date negatively affects the credit score.
  • You especially want to pay all your loans such as student loans on time and meet all your daily expenses such as rent and other utilities.
  • Late or missed payments that are beyond seven years behind have less effect on your credit score.

Get credit and make cell phone payments on time

There is more you can do to boost your credit score. In addition to paying your debt-installments in time, you can also factor cell phone payments. A new service called Experian Boost lets you improve your credit score if you have been making utility bills and phone payments on time.

In order to this, you can link Experian Boost with your bank account to generate a report of your history in paying telecom and other utilities. You can then select those payments that you want to be added to the Experian credit file. Your new FICO score is generated immediately.

  • Register in Experian Boost and get access to FICO score and a credit report for free.

Maintain low balances on credit cards

Low credit utilization tells lenders that you are a good credit manager. This credit utilization ratio is a substantial credit score calculation. The figure is arrived at by adding all the credit balances and dividing the figure by the total credit limit.

To get your credit utilization ratio, check for credit card statements for the last 12 months. Add all the balances in the statements for every month for all the cards and divide the figure by 12. The number you get is the credit that you've use on every single month. You can further improve your credit utilization ratio by paying debts on time and maintaining small credit balance cards.

Open credit card accounts only when it is essential

Opening many credit accounts without any use might do you more harm than good. They may end up making your credit score worse than it was before.
Unnecessary credit creates many hard inquiries in your credit report. In addition, they tempt you to overspend thereby accumulating higher debt.

Keep credit card accounts open

Ensure that even credits cards that are not in use remain open. As long as they are open, they don't cost you annual fees. When you close an account, it increases your credit utilization ratio. The average age of your account also matters a lot. As the account is growing old, it adds on to your points. Therefore, the older the account, the more points you get.

Use different types of credit accounts

Lenders want to see how you can manage different credit types. Student loans and mortgages fall in the kind of installment loans. Home equity and credit card are revolving credit. Therefore, mix different types of credits. For instance, take an installment loan and revolving credit. However, do not make a mistake of opening too many accounts at the same time. It will negatively affect your credit score.

Be cautious with outstanding collections

Paying your debts always in time is not necessarily a guarantee that your credit score will improve. It is evident in the new version of FICO and VintageScore which ignore paid collections. The best way to go about your debts is by paying off the latest accounts which are likely to affect your score significantly. Non-medical collections also affect your score.

Some accounts only reset your credit score instead of improving them. Therefore, be careful with outstanding credit collections. Research before proceeding with outstanding collections.


To improve or repair your credit score, what you need to do is understand what is affecting your score and then working to resolve the issue. The following are some factors that affect the credit score that you might consider checking.

  • Credit payment history
  • Credit utilization ratio
  • The age of your credit
  • Types of your credit accounts
  • Number of inquiries

Credit payment history and credit utilization ratio make up to 65 percent of your score. Maintain your credit utilization ratio at 30 percent and soon your credit score will start improving.