Boost your credit score with these simple steps

Your credit score is effectively a report card for how you manage your debt. The higher it is, the better your chances of qualifying for credit when you need it and with favorable terms.

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If you’re new to credit or you’ve made some missteps in the past, it can take a while to get to where you want to be. But taking steps now to improve your credit score can produce some fast results.

Why happens if my credit score is low?

Life is complicated, and it’s not always easy to stay on top of your finances. But maintaining a good credit history should be toward the top of your financial priorities. Not only will a bad or fair credit score make it difficult to get approved for a loan or credit card, but it can also cause you to pay higher interest rates.

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There are multiple ways to raise your credit score. (iStock)

What’s more, your credit history is often used for more than just loan and credit card approvals. While landlords and employers can’t actually view your credit score, for instance, they may choose to run a credit check when you apply for a lease or a job. If there’s something amiss that could be negatively impacting your credit score, you could be denied.

Also, in many states, auto and homeowners insurance companies use what’s called credit-based insurance scores to help determine your premiums. While a poor credit score alone won’t cause a rate hike, it could contribute to one if there are also other reasons to consider you a risk.

Steps you can take to improve your credit score

If you’re looking to boost or improve your credit score, here are some concrete steps you can take:

  • Pay your bills on time: Your payment history is the most important factor in your FICO credit score. If you’re behind on payments with one or more accounts, get caught up as quickly as possible, and make a plan to pay your bills on time going forward. “One of the best and easiest ways to build credit is by opening a credit card,” says Mike Pearson, founder of Credit Takeoff. “This puts you on the credit map because it prompts creditors to start reporting your payment history.”
  • Keep your credit card balance low: Your credit utilization rate — how much of your available credit on credit cards you’re using — is another important element in your FICO score. Credit experts recommend keeping your balances below 30% of your credit limits, but the lower, the better. 
  • Get added as an authorized user: If you have a trusted family member with a strong credit history, you may be able to benefit from it. “Ask a relative with a good credit history to add you as an authorized user on one of their credit cards,” says Pearson. “This gives you a chance to start establishing a credit history without being on the hook for any payments.” The arrangement can help prop up your score as soon as it is calculated with the new information.
  • Look for credit report errors: Check your credit reports via AnnualCreditReport.com for anything that could be incorrect or fraudulent. If you see something that doesn’t belong, you can file a dispute with the credit bureaus to have it removed. If you need assistance, credit repair companies can help fix credit score problems that arise from erroneous credit report data. Once the incorrect information has been removed, you may see your score rebound quickly.

With some programs, including Experian Boost and UltraFICO, you can also improve your credit score with utility payments and how you manage your money. But for the time being, these may have less of an impact on the actual credit scores lenders use.

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“When you’re starting from scratch, building your credit can feel like a slog,” says Pearson. “But persistence definitely pays off, and establishing a good credit history may not take as long as you expect if you’re committed to working hard at it.”