Are you wondering how to increase your credit score? We’ve put together seven helpful strategies that can lead to improvements over time.
1. Automate and make bill payments on time
Payment history accounts for the largest share of your credit score. Make on-time bill payments your top financial priority if you’re improving your credit score.
Here are some ways to ensure your accounts stay up-to-date and in good standing:
- Set up automatic payments:Setting up automatic paymentsfor the minimum amount due every month ensures you won’t miss a payment. Late payments can stay on your credit report for up to seven years.3
- Address missed payments:If you miss a payment, pay it as soon as you can. Then call the credit card company and ask if they’ll consider not reporting the missed payment to the credit bureaus.
- Stay on top of other accounts:Keep close tabs on other accounts, even if they don’t usually appear on your credit reports, such as gym memberships and subscription services. If you don’t keep up with payments, the account could be sent to collections – and thatwillshow up on your credit report.
2. Pay balances strategically
When determining how to boost your credit score, you can try one of several popular debt payment strategies, including the 15/3 method, thedebt snowball method, and the debt avalanche method.
- 15/3 credit card payment strategy:You’ll make two payments each month – one 15 days before thecredit card statementdate and another three days before. This helps keep your credit utilization down ahead of the statement date when creditors typically report your utilization to the bureaus.
- Debt snowball method:This strategy can help when juggling multiple debts. You’ll make minimum payments on all your debts, but then you’ll throw all your extra money at the smallest debt until you’ve knocked it out. Then you’ll focus on the next smallest and so on until you’re tackling your largest debt. The early victories can boost your morale and keep you on track to pay off your debt.
- Debt avalanche method:The debt avalanche method may not have little victories up front, but it can save you money in the long run. This strategy focuses on wiping out the debt with the highest interest rate first, then working your way down to the lowest-interest debt.
These aren’t the only three strategies for paying off debt but are among the most popular. What’s most important is finding a system that works for you – and sticking to it.
3. Increase your credit limits
Paying down your balances can free up available credit and improve your credit utilization. But debt payoff takes time.
Bumping up your credit card limits is a faster way to decrease your credit utilization. Your utilization goes down as your credit limit goes up but your balance stays the same. This can improve your credit score significantly.
So how can youincrease your credit limits? Just ask!
If you land a new job, get a promotion, or add more income through a side gig, ask your credit card issuers about a higher limit. You can also do this after several years of positive credit experience.
Chime Tip: While increasing your credit limit can be helpful, you can still work on your credit utilization by simply spending less with your credit card. A good rule of thumb is to keep your credit card utilization at30% max.
For example, if your credit limit is $1,000, your total balance shouldn’t exceed $300 at any given time. If you hit $300, pay it off – even if the balance isn’t due yet – before using the card again.
4. Sign up for free credit monitoring
Credit monitoringservices can help you keep tabs on your credit history as you work toward improving your score.
Companies like Credit Karma and Credit Sesame offer this service for free. Chime members canmonitor their FICO scorein the Chime app.
You can also request a free credit report every 12 months from the three major credit bureaus.
Monitoring your credit allows you to spot and dispute errors and potential fraud. While credit monitoring services can’tprevent identity theft, they can keep you informed to take action if you notice something is wrong.
And don’t worry:checking your credit score doesn’t lower it.
5. Dispute credit report errors
Credit bureaus collect your information from companies where you have open accounts, such as banks, credit card issuers, retailers, car and mortgage lenders, and even utility companies. These bureaus do their best to get it right, but everyone makes mistakes.
34% of people have an error on their credit report.4Some errors – like incorrectly reported balances or inaccurate gaps in your payment history – can hurt your score significantly.
Find an error on your credit report? Follow that credit bureau’s steps for filing a dispute (and check your other reports to see if the same error appears there). Credit bureaus have 30 days to investigate disputes after you file.5
Still need help? The Federal Trade Commission has aguide for disputing credit report errors.
6. Don’t close old accounts
If you’ve successfully paid off one or more of your credit cards, you’ve earned the right to a victory dance.
But don’t close the account when you’re done dancing. In fact, keep it open for as long as you can — just don’t spend with the account.
Why? The length of your credit history and the ages of your different accounts affect your credit score. Typically a longer credit history results in a higher score.
Plus, leaving a card open – and rarely using it – helps lower your credit utilization and boost your score.
Pro Tip:Some credit card companies may close cards due to inactivity. Use your old credit card once or twice a year for something small, like a pack of gum, then pay it off immediately to avoid interest.
7. Use a secured credit card
Establishing andbuilding creditcan feel like a catch-22 when you’re just getting started.
After all, responsible credit card management is one of the easiest ways to improve your credit score. But you often need a decent credit score to qualify for a credit card to begin with.
So how can you get a credit card to start building your credit? Asecured credit cardmight be the right path. This type of card requires you to make a cash deposit that serves as collateral for the account. This reduces the risk for the credit card company, which means people with low or no credit can usually qualify.
Use this credit card responsibly for several months: Make on-time payments and keep the utilization low. Over time, your score should improve, and you may be able to qualify for a credit card with a higher limit and no security deposit.
