How to Improve Your Credit Score

A good credit score allows you to secure better terms and lower interest rates on loans and credit cards. However, you cannot improve your credit score overnight. Identifying the factors negatively impacting your credit score is the first step toward improving it. We have curated a list of essential ways to help you quickly improve your credit score.

What Is a Credit Score?

When you need to borrow money, open a new utility account, or rent a place, you ask the other party to trust that you’ll handle your financial responsibilities. It’s not practical for lenders or landlords to contact all your credit card companies to check your payment history. Instead, they rely on your credit score.

Your credit score is a numerical reflection of your borrowing and repayment habits. It’s a three-digit number that tells creditors how reliable you are as a borrower. The higher your credit score, the more trustworthy you seem to potential landlords and lenders.

It might seem unfair that a single number can represent your financial history, but creditors consider it very important. A low credit score can result in high interest rates on loans and credit cards if you qualify for them. You might also be required to pay a deposit just to get a cellphone plan.

On the other hand, a high credit score gives you access to the best borrowing rates. This advantage means you won’t have to deal with the consequences of appearing financially unreliable, such as paying more or missing out on opportunities.

So, What Is Considered a Good Credit Score?

Credit score ranges might change depending on the scoring algorithm employed—FICO or VantageScore are the two most common models. The two models are depicted as follows:

1. FICO Model

• Poor: 300-579
• Fair: 580-669:
• Good: 670-739
• Very Good: 740-799
• Excellent: 800-850

2. VantageScore Model

• Poor: 300-499
• Fair: 500-600
• Good: 601-660
• Very Good: 661-780
• Excellent: 781-850

Please keep in mind that a lender’s approval of a new credit account or a particular interest rate cannot be guaranteed by a good credit score. Higher ratings, on the other hand, usually imply prudent credit activity, which gives creditors and lenders greater assurance when assessing fresh loan requests.

Understanding the Variability of Credit Scores

A common misconception is that individuals only have a single credit score. But, there are several different credit ratings and scoring methods (besides FICO and VantageScore). The credit report on which your credit score is based, the scoring methodology employed, and the consumer reporting agencies (CRA) that provide the score can all affect your credit score.

The three nationwide CRAs — TransUnion, Experian, and Equifax — may provide varying scores because lenders might report information differently to each agency. Some lenders may report to only one or two agencies or not at all. Remember that credit scores can also vary by industry.

How Is Your Credit Score Calculated?

Your credit reports’ contents are used to compute your credit ratings. Contrary to popular belief, several credit scores can be obtained, depending on the methodology employed.

While scoring models differ, they generally consider the following factors:

• Credit Utilization Rate: This represents the ratio of the amount of revolving credit you are utilizing to the total credit amount available on all of those accounts. When credit utilization is at or below 30%, lenders frequently like it. Lenders may see it favorably if you simply use the required credit.
• Payment History: The biggest determinant of your credit score is how consistently you have paid your timely payments. Due to the significance of this component, missing or late payments might significantly affect your score.
• Credit Mix: The term “credit mix” describes the range of accounts you own, including mortgages, credit cards, and student loans. Lenders will assume you know how to handle a variety of credit if you have a strong payment history and a varied credit mix.
• Credit Age: Credit lines that have been created are preferred by lenders. Even if you are no longer using your credit accounts, keeping them open can help you keep your credit history longer, which raises your credit score.
• Hard Inquiries: Hard inquiries happen when you apply for a new credit line, and a creditor or lender reviews your credit. Regular hard queries may hurt your credit score and convey to lenders the idea that you are attempting to take on more debt than you can responsibly handle.
• Amount You Owe: This is the total of all your credit lines’ balances. Try to settle your debts at the end of each month. This minimizes the amount you owe and shows lenders that you can make timely payments.

Best Tips to Improve Your Credit Score in 2025

1. Review Your Credit Reports

Before you can raise your credit score, it is critical to comprehend the variables that affect it. First things first, look up your credit history. Get a copy of your credit report from Equifax, TransUnion, and Experian, the three main national credit bureaus. Examine every report to determine what is improving or detracting from your score.

To improve your credit score, remember to maintain a history of low credit card balances, make timely payments, keep older credit accounts, maintain a combination of loan and credit card accounts, and minimize new credit inquiries. Conversely, judgments, collections, high credit card debt, and missed or late payments can negatively impact a high credit score.

Check your credit reports for any signs of fraud or identity theft, and ensure they are accurate. Prioritize paying off old debts by identifying accounts in collections or outstanding balances. It’s a good practice to regularly check your credit score, but be cautious about making too many inquiries to avoid harming your score.

2. Build Your Credit File

To establish and enhance your credit history, it’s important to open accounts that are reported to major credit bureaus. Most prominent lenders and card issuers report to all three major bureaus, making it advantageous to maintain a number of active credit accounts.

Consider options like credit-builder loans or secured credit cards for beginners or those with low credit scores. If you already have a decent credit score and aim to improve it, consider a rewards credit card that does not charge an annual fee. Additionally, becoming an authorized user of another person’s credit card can also be beneficial if the card is used responsibly.

For individuals without any credit history, the initial step is to acquire a credit report from a bureau. Services like Experian Go offer the ability to create a free credit report even without existing credit accounts and provide advice on how to build your credit.

3. Pay Your Bills on Time

Make paying your bills on time a priority. Make sure you pay the minimal amount due on each of your accounts each month. Always try to make payments that are more than the minimal amount owed. Since your payment history makes up roughly 35% of your FICO Score, using this method can help you pay off your debt more quickly overall, save money on interest, and possibly even improve your credit score.

To ensure timely payments, consider setting up automatic payments for your credit card bills or using online bill pay services for convenient bill management and payment.

4. Handle Debt in Collections

If you believe there is an error in your outstanding debt that has been assigned to collections, you may want to look at settling the amount or contesting it. A debt typically goes into collections when it is past due for more than three months. The original creditor or a collection agency may contact you frequently with messages or calls.

You’re entitled to request that the debt collector cease communication with you, but it’s advisable to deal with the debt proactively. You can choose to pay the full amount or negotiate a settlement. Ignoring the debt can harm your credit score and might lead to legal action, which could result in wage garnishment or a lien on your property.

5. Think Before Taking on New Credit

Acquiring a new credit card can positively and negatively impact your credit score, so it’s important to proceed with caution. Research from FICO, a leading credit score provider, indicates that individuals who open multiple credit accounts quickly may have higher credit risks. Applying for a new credit card can initially lower your score due to a hard credit check and the decrease in the average age of your accounts.

Open new accounts sparingly, especially if you plan to apply for a mortgage or other major loan soon. If you do get a new credit card, try to use it minimally. This helps keep your credit utilization low, positively impacting your credit health. For those with limited credit history, a new card can help improve your score, provided you make timely payments and avoid accumulating too much debt.

6. Think Before Closing Accounts

Closing credit accounts can temporarily reduce your available credit and have a negative effect on your credit score because your credit utilization ratio is a significant determinant of your credit score. It may also lessen the average age of your credit reports. If you are closing an account to stop more debt from accumulating, it can be a wise move.

If not necessary, you might want to consider keeping accounts open, especially those with a positive payment history and low or zero balance.

7. Check Your Credit Report for Errors

Reviewing your credit report for errors is a quick way to increase your credit score potentially. If you find and successfully dispute errors, your score may improve. Approximately 42 million Americans have errors on their credit reports, so it’s crucial to take the time to review yours. Common errors include fraudulent or duplicated accounts and misreported payments.

Many clients we meet have yet to review their credit reports within the past year and are often surprised by what we find to discuss with them.

8. Aim for 30% Credit Utilization

Credit utilization, the portion of your credit limit you use at any given time, is the second most important factor in FICO calculations after payment history. Aim to pay your credit card balances in full each month to keep your credit utilization in check. If that’s not always possible, try to keep your total outstanding balance at 30% or less of your total credit limit. Ideally, work towards reducing it to 10% or less to boost your credit score further.

Another way to improve your credit utilization ratio is to ask for a credit limit increase. Raising your credit limit can help, as long as your balance doesn’t increase proportionally. Most credit card companies allow you to request a credit limit increase online by updating your annual household income, with approvals often taking less than a minute. You can also request a credit limit increase over the phone.

How Soon Can You Expect Changes in Your Credit Score?

The duration required to repair a damaged credit score varies based on the specifics of each case. While big changes usually take time, some progress can happen quite rapidly. Recovering from foreclosure or an account that goes into collections, for instance, maybe more challenging than recovering from a single late payment or a few harsh inquiries.

Most bad information, including missed payments, typically remains on your credit report for a maximum of seven years. However, bankruptcy filed under Chapter 7 can last up to ten years. Recall that patience and persistent effort are necessary for raising your credit score. Overnight fluctuations in your credit score cannot be fixed quickly, nor is there a universally applicable cure.

How to Check and Monitor Your Credit?

Your credit score can change over time, so it’s important to monitor it. Previously, checking your credit score often meant signing up for expensive and unnecessary credit monitoring services. However, many companies now offer credit score visibility to consumers, similar to what financial institutions have always had.

Your FICO score is the one most commonly used by lenders, making it the most important score to monitor. Several sources, such as credit card issuers and banks, provide your monthly FICO score for free. For instance, Wells Fargo and Bank of America offer free FICO scores in collaboration with Experian and TransUnion.

Your bank offers free VantageScores if not free FICO scores. VantageScore has a similar scoring algorithm to FICO, but lenders employ it less frequently. Chase, US Bank, and Capital One provide VantageScores for free via one of the three credit bureaus. Furthermore, free credit ratings are available on many websites and applications. You can also visit AnnualCreditReport.com to receive a weekly free credit report from the three main credit bureaus (Experian, Equifax, and TransUnion).

These free resources allow you to monitor your credit and stay informed about any changes easily.

Conclusion

Improving your credit score is a gradual process that requires understanding, diligence, and patience. By familiarizing yourself with the factors influencing your credit score and implementing strategic steps, you can work towards achieving a better financial standing. Remember, your credit score reflects not only your past financial behaviors but also a tool that impacts your future opportunities.

To begin with, review your credit reports to identify areas for improvement and ensure accuracy. Building a positive credit history involves making timely payments, managing debt responsibly, and diversifying your credit accounts. While there’s no quick fix for boosting your credit score overnight, consistent efforts and responsible financial habits can lead to significant improvements over time.

Monitoring your credit score regularly allows you to track your progress and address any issues promptly. By staying informed and proactive, you can take control of your financial health and pave the way for greater economic freedom and opportunities in the future.

Frequently Asked Questions