How to Improve Your Credit Score

Guide to Repair Credit & Improve Your Credit Score

From renting an apartment to buying a home, securing a low-interest credit card, and even obtaining a job, your credit score and overall credit can open doors of opportunity or serve as a barrier to a better life. When you have bad or poor credit, you are more likely to be turned down for housing, jobs, loans, and the very credit cards that people with good credit use to build their credit. It can seem impossible to repair credit, especially if you can’t get approved for most credit cards in the first place or if you have thousands of dollars in credit card debt already. Good news is, it’s possible to increase your credit score, but it can take some work on your part. The following 6 steps will help you improve your credit score.

1. Review Your Credit Reports and Identify Problems

The first step to improving your credit is to review your credit reports to make sure they are accurate and to help understand what is helping or hurting your credit score. Once you understand what is in your credit reports, you can identify and address your credit problems.

There are three national credit reporting agencies: Experian, Equifax, and TransUnion. These credit reporting agencies, often referred to as credit bureaus, collect information on millions of borrowers’ credit history including the following:

  • Any credit cards in your name and their credit limits
  • The amount of any loans you have taken out
  • The payment status of your accounts
  • The balance on your loans and credit cards
  • Information on late payments
  • Any items sent to collections
  • Bankruptcies and other public records

You can obtain a credit report from each of the three national credit reporting agencies once per year for free, as required under the Fair Credit Reporting Act. You can access your free reports at, a government-mandated website.

Once you have repaired your credit, it is useful to stagger your requests with each company to give you a better sense of your credit throughout the year. However, when you are looking to repair your credit you may want to request reports from all three companies at the same time and compare them for accuracy.

When looking through your credit reports, it can be helpful to print them out and highlight any errors or inconsistencies between the three reports. If something stands out to you as unfamiliar, flag it. Look out for errors and inaccurate information in all sections of the reports, including your personal information. You should also look out for late payments, information about open and closed accounts, and for any accounts or other information that you don’t recognize.

2. File a Credit Report Dispute for Any Inaccurate Information

If you find an error on one or more of your credit reports, you will need to dispute it with the credit agency. If the error occurs on all three reports, you must dispute with each agency separately. Additionally, if there are multiple errors on your report, you must dispute each error separately. This includes errors to personal information as well as accounts you don’t recognize, late payments that you remember paying on time, bankruptcies or other judgements that you don’t recognize, and any other information in the reports that you do not recognize as being true.

Credit reports should include information on how to dispute any inaccurate data. If you can’t find that or it is unclear, you can also visit the credit reporting agency’s website. Each of the three national credit reporting agencies allow you to file a dispute online. In the dispute, you should include supporting documentation of your claim, if you have it. Once the dispute is filed, the credit reporting agency has between 30 and 45 days to research your claim and determine whether the information is accurate. Errors and unverifiable information must be removed if the credit reporting agency cannot prove an item’s validity. If you have multiple or complicated errors to dispute, or if you believe you have been the victim of identity theft that may be difficult to prove, you can hire a credit repair company.

3. Make a Plan to Change to Your Spending Habits

If your credit reports are accurate, or you only had minor errors such as an incorrect address, your spending habits may be to blame. There are a number of factors related to spending and debt that can negatively impact your credit and your credit score. Applying forf too many credit cards in a short period of time, maxing out existing credit cards, regularly making late payments, only having one type of credit, and having a very limited credit history can all result in a low credit score.

Once you have identified what factors are negatively impacting your credit, you can make a plan to change your habits. If applying to too many credit cards at once is the problem, make a plan to stop applying for new credit cards for at least six months. If you continually max out your existing credit cards, look at your spending history and identify if there are places you can cut back. Additionally, make sure that you recognize all of your purchases. If you regularly make late payments because you forget, make yourself a reminder or see if you can set up automatic payments. If you do not have or need a vehicle or other type of credit besides a credit card or simply have a very limited credit history, you may need to simply wait for your existing credit to build up to a higher score.

4. Address Late Payments and Collections

If you have a history of late payments or have accounts that have been sent to collections, these need to be addressed. To address late payments, make sure that you know when payments are due, set up reminders, or set up autopay. If the payment due date no longer fits with your paycheck schedule, you should be able to change the due date to a day of the month that works better for you. If late payments have caused additional late charges and interest to accrue, try to pay off those late charges and interest as soon as possible.

If an account has been too late and sent to collections, pay it off as soon as possible, and ideally not with another credit account. Debt collectors are known for harassment and adding on significant fees if you do not pay the full amount at once, so prompt payment will save you money and save you from constant phone calls.

5. Pay Down Credit Card Balances

Credit balances impact your credit score; if you have maxed out credit cards, paying them down and keeping the balance lower can improve your score. Additionally, if you keep the balance high and do not pay it down entirely each month, it will impact your credit and cost you more money in interest. Even if you pay your balances in full every month, having a high balance before payment can damage your credit score.

As a general rule, keep credit card balances below 30% of your limits and pay off the balance each month to build good credit. If you know that your balance is going to go over 30%, pre-paying some of that balance earlier in the month can help, as the credit reporting agencies typically see only the final balance at billing time and not balance fluctuations throughout the month.

6. Open One Secured Credit Card

If you have never had a credit card or have other poor credit preventing you from being approved for standard credit cards, a secured credit card can help you build credit. Unlike traditional credit cards, secured credit cards require you to tie the credit card to a checking or savings account in which you have deposited a given amount of money. For example, you might open a savings account with $300 and get a secured credit card with a maximum balance of $300. In some cases, you may be able to get a higher credit limit than the amount that you deposit.

In order to make sure your secured credit card helps build good credit, make sure that you pay off your balance each month, on time. Using the card for small purchases that can easily be paid off can help you from building up a balance that you can’t afford. As with other credit cards, using payment reminders or setting up autopay can help you avoid late payments that can hurt your credit. After you have had your secured credit card for a while and have been making regular, on time payments, you may qualify for a traditional, or unsecured, credit card.

In any of these steps to repair credit, it will take time; there is no quick path to increase your credit score, especially if you have damaged your credit. However, if you check your credit reports, dispute errors, change your habits, pay down balances, address late payments, pay off accounts in collections, and get yourself on the right track with a secured credit card, you can improve your credit score. Doing so will save you money, save you the mental burden of worrying about late payments or calls from debt collectors, and will set you up to take advantage of life’s opportunities. If you have additional questions or need help repairing your credit reach out to one of EcoCredit specialists.