5 Actions You Can Take to Improve Your Credit Score

Your credit score plays a huge role in your financial life. It affects your ability to get approved for a loan or credit card, the interest rates you’ll be charged, and even your insurance premiums or rental applications. Whether you’re trying to buy a car, rent an apartment, or just build a strong credit profile, having a healthy credit score can make a big difference.

Most credit scores, such as FICO and VantageScore, range from 300 to 850. These scores are based on your payment history, credit utilization, credit mix, length of credit history, and recent credit inquiries. Even small changes in these areas can help you build a higher credit score over time.

Below are five key actions you can take to improve your credit; each one focused on real, measurable steps that support your financial goals.

1. Make Payments on Time

Your payment history is the most important factor in your credit score, accounting for about 35% of your total score. If you’ve made missed payments in the past, the best way to improve your score is to stop that pattern now. Lenders want to see that you can handle your responsibilities by making on-time payments every month.

Even one late payment can negatively affect your credit. CreditKarma reports that a missed payment can stay on your credit report for seven years and damage your credit significantly.

To avoid this, try:

• Setting up automatic payments with your bank or credit card issuer
• Using mobile alerts or calendar reminders to pay bills on time
• Paying at least the minimum balance by the due date
• Avoiding delinquent payments that lead to collections or charge-offs

If you need help getting back on track, a certified credit counselor can help you set up a personalized payment plan.

2. Pay Down Balances and Keep Your Utilization Low

The second most important factor in your credit score is your credit utilization rate, which looks at how much of your total available credit you’re using. Keeping a low balance helps your score; using a high percentage of your available credit limit can hurt it, even if you pay on time.

For example, if you have a $10,000 total limit and owe $5,000, your utilization rate is 50%. Aim to keep it below 30%, or even better, under 10%.

Here’s how to improve it:

• Use savings or a windfall to lower your balance
• Ask for a higher credit limit from your issuer
• Make extra payments mid-month, before the billing cycle ends
• Pay down cards with the highest credit card balances first

You might also consider opening new credit accounts, which can increase your total credit and improve your utilization. But be cautious; every hard inquiry from a new application may cause a short-term dip in your score.

Also, try not to close old accounts unless you must. An old account with a high credit limit helps both your utilization and credit history.

To understand how this works, check out our guide: Strategies for Paying Off Credit Card Debt.

3. Monitor and Understand Your Credit Report

Your credit report is a detailed record of your credit accounts, payments, balances, and any negative activity. Reviewing it regularly helps you understand what lenders see and spot credit report errors that could be unfairly lowering your score.

You’re entitled to free reports from each of the three major credit bureaus—Equifax, Experian, and TransUnion—through AnnualCreditReport.com. These reports show your open accounts, credit inquiries, loan balances, and payment records.

Look closely for:

• Incorrect account information or duplicated accounts
• Missed payments you actually made
• Old debts that should have aged off after seven years
• Fraudulent activity due to identity theft

If you spot an error, dispute it directly with the bureau. You can also learn how to file a dispute using our guide: How to Dispute Credit Reports.

4. Correct credit report errors before they hurt you

Once you’ve reviewed your credit report, it’s time to fix anything that shouldn’t be there. Credit report errors can significantly lower your credit score, especially if they involve missed payments, incorrect credit card bills, or accounts that don’t belong to you.

Some of the most common issues include:

• Outdated account balances or closed open accounts
• Negative items that should have dropped off after seven years
• Late payments that were actually paid on time
• Accounts opened due to identity theft or clerical mistakes
• Duplicate listings for the same debt

These issues can reduce your score and raise your perceived credit risk in the eyes of most lenders. Under the Fair Credit Reporting Act, you have the right to dispute any inaccurate or unverifiable information.

To fix your report:

1. Identify the issue using your current credit report
2. Gather backup documentation
3. File a dispute online with each of the three credit reporting agencies
4. Monitor the investigation and follow up if needed

In most cases, the bureau must respond to your dispute within 30 days. For help with this process, read: The Ultimate Guide to Disputing Inaccuracies on Your Credit Report.

Also, check your credit profile regularly to make sure that new errors don’t appear. Staying proactive is one of the best ways to keep your credit score on the rise.

5. Add new accounts strategically to improve credit mix

If your credit file is thin or consists of only one type of account, adding another account can help diversify your credit mix. Credit scoring models look for a balance of revolving credit (like credit cards) and installment loans (like a car loan or installment loan). A better mix may lead to a better score.

Here are examples of a well-rounded mix:

• A mortgage or auto loan
• One or two well-managed credit cards
• A secured credit card if you’re rebuilding or starting out

Opening a new credit account might also help you boost your available credit and improve your credit utilization rate, especially if you’re carrying balances on existing cards.

However, opening new credit comes with risks. Each hard inquiry can reduce your score slightly, and taking on more debt than you can handle may do more harm than good.

If you decide to open a new account, do so with a clear plan. And always avoid opening several accounts in a short period of time; that can signal higher risk to lenders.

Consider becoming an authorized user

Another way to boost your credit score is to become an authorized user on someone else’s credit card. This means the primary account holder adds you to their existing account, and the account’s payment history becomes part of your credit file.

If the account is old and has a high credit limit, it can help your score in several ways:

• Extending your credit history
• Improving your overall credit utilization
• Adding positive on-time payments to your file

You won’t be responsible for paying the balance, but you should only ask someone you trust. If they carry high balances or make late payments, you could be negatively affected.

This strategy is especially helpful for young adults, students, or anyone trying to begin building credit. Even though it carries less weight than your own account, being an authorized user can still give your score a nudge in the right direction.

Don’t ignore your current credit card accounts

Managing your current credit card accounts is just as important as opening new ones. If you already have cards, use them wisely to show responsible borrowing.

Here’s how:

• Keep balances low compared to your credit limits
• Avoid high credit card balances that can hurt your utilization ratio
• Make more than the minimum payments whenever possible
• Don’t skip payments; even on small charges
• Leave older accounts open, especially those in good standing

Using your cards for small purchases and paying them off in full each month is one of the best ways to build a good credit score over time.

If you’re worried about overspending, set up automatic payments or payment alerts to stay on track. And remember, having multiple cards isn’t the goal. Using even one card well can significantly help your credit.

Preserve your credit history for long-term gains

The age of your credit history matters more than most people realize. Credit scoring models look at the average age of your accounts to determine how long you’ve been responsibly managing credit. This part of your score might not have as much weight as payment history or credit utilization, but it can still help push you into a higher credit category.

To protect this important part of your score:

• Keep old accounts open, especially those in good standing
• Avoid closing credit cards just because you don’t use them often
• Use older cards for small recurring bills to prevent the issuer from closing them
• Let your longest-standing credit card accounts stay active as anchors for your profile

Be careful: closing your oldest account could shorten your credit history and raise your utilization rate, especially if the account has a high available credit limit.

Add personal statements if needed

In some cases, negative items may remain on your credit report even after you’ve taken steps to address them. If this happens, you can add a 100-word personal statement to explain the situation. For example, if you missed payments due to medical emergencies, a job loss, or natural disaster, you can explain this to future lenders.

This won’t change your FICO score, but it gives lenders more context. Your statement becomes part of your credit file and can be seen by anyone who pulls your report.

Learn how to add this note in our article: Adding a Personal Statement to Your Credit Report.

Pay bills consistently to avoid future damage

Staying current on all your payments is one of the best habits you can develop to improve your credit score fast. While past missed payments do hurt, future on-time activity helps to repair the damage.

Don’t overlook small bills like medical co-pays or utilities; if sent to collections, they could become collection accounts on your report and affect your score. Pay everything on time, even if it’s a small balance. This includes:

• Phone and utility bills
• Subscription services
• Store cards
• Installment loans and auto payments

If you’re overwhelmed, prioritize paying secured debts and large balances first. Then tackle smaller debts to reduce your overall debt load.

Think long-term when managing credit cards and loans

Improving your credit isn’t just about today’s score; it’s about future financial health. Focus on making smart choices that support your long-term goals:

• Don’t max out your credit cards
• Don’t apply for too many new accounts at once
• Don’t take out a car loan or personal loan unless you need it
• Do ask about higher credit limits when your finances improve
• Do pay attention to your full credit profile regularly

Responsible use of revolving credit, like a credit card, combined with timely loan repayments, gives your credit file strength and stability.

Keep checking your credit and adjusting your strategy

Good credit habits require regular attention. By monitoring your progress, you can catch errors, see improvements, and know when it’s time to adjust your approach.

Use free tools provided by your bank or card issuer to track your score and credit utilization. You can also use sites that give you access to free credit reports or credit monitoring.

As your situation changes—whether you pay off a debt, open a new account, or refinance a loan—your credit score will change too. Stay flexible and informed so you can make smart decisions at every step.

If you’re unsure whether you should open or close an account, talk to a counselor. At Credit.org, we help people understand the pros and cons of every financial move.

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