Improving Your Credit and Your Credit Score

If your credit score is lower than you want it to be, you’re not alone. It’s estimated that 30 percent of Americans have bad or subprime credit.15

But the good news is that your credit score CAN be improved. And it’s actually not all that difficult—though it does take time. But don’t worry. You can start today. Here’s how:

  1. Pay outstanding bills and debts on time.

Okay. We hear you. If you could pay your outstanding debts, you wouldn’t have bad credit. So, if you have low income, bad credit, and a lot of debt, what can you do? Well, this is going to be one of those times when the simplest answer is the best one: Stop spending. You’re going to have to budget and cut out all the expenses you can do without. It isn’t hard once you get started. If you have a $5-a-day Starbucks habit, cut it out for a week. That’s $35 dollars right there you can spend on a utility or credit card bill. It’s not fun, but it is responsible. And it’s the most important first step you can take on the road to credit recovery.

  1. Stop using your credit cards, pay them off and keep them open.

You’ve probably heard about people cutting up their credit cards or even freezing them in blocks of ice to keep themselves from overusing it. We don’t necessarily recommend doing something that drastic, but if hiding your credit card from yourself helps you not to use it—go for it! When you don’t use your credit card, you’re not racking up debt. Which will make it that much easier to pay down. Set a goal to pay off your credit card or cards and see it through. Paying off a credit card is a major achievement, but then keeping that card open and not using it is even better! This will free up available credit and help improve your score over time.

*Image Data Source: “2016’s Credit Score Fun Facts.” WalletHub. N.p., n.d. Web. 08 Mar. 2017. <>.


  1. If you can’t pay off your credit card, get your balance down to 25 or 30 percent. This is your credit utilization ratio.

If paying off your card completely isn’t possible right now, don’t worry. Just get it down to 30 percent of your credit limit. Here’s what we mean: If you have a single credit card with a thousand-dollar limit, reduce your balance to $300. You’ll have $700 of available credit—put another way, 70 percent of your credit limit will be unused. This is the magic number. Paying off the card in total is best, but if you can’t do that right now, get your balance down to 30 percent of your total limit. This will help improve your score over time.

  1. Consider taking out an installment loan with a reputable lender who reports payments to credit bureaus.

A personal installment loan can improve your credit if you make your monthly payments on time. The trick is to find a lender who reports your payments to one, two or all three credit bureaus. On-time payments will get reported and reflect positively on your credit usage. This can elevate your score. But be careful, there are predatory lenders out there like payday and title lenders. They’re not interested in helping you improve your credit. They’re only interested in trapping you in debt or taking your car! Shop for a lender with high customer ratings and a Better Business Bureau accreditation. And then, work with them to structure a loan that you can afford to repay on time and ultimately pay off.

  1. Work with a credit counselor.

There are credit counselors available to help you at no (or low) cost. Credit counselors work with you to create a debt repayment plan and they can even negotiate on your behalf with your creditors. But, as always, there are scammers to watch out for. Don’t go with a credit counselor who makes outlandish promises that seem too good to be true—they probably are. Instead, work with legitimate, trained counselors you can find through:

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