It’s easy to get stressed when your credit isn’t where you want it to be, especially if you feel like it’s keeping you from achieving your goals. But improving your credit is within your reach. It might take time. It might not be a straight line to a higher score, but keeping your eyes on the prize and treating the journey like a game will help you keep things in context. Ultimately, your credit score is just a number, and you can take some simple steps to raise it.
Get your credit report and and make sure it’s correct!
A credit report is different from your credit score. It’s a detailed record of your credit history, including your lines of credit and usage as well as your history of on-time and late payments. You’ll see any judgments, tax liens, and bankruptcies on this report. You’ll also find a list of recent hard inquiries into your credit, which are made by creditors, insurers, lenders, and landlords. This information will help you identify what’s bringing your score down and help you work towards raising it.
Also—and we can’t stress this enough—check your reports for errors! They happen, and fixing them can make a big difference in your score. You can get your credit report for free once a year from the three major credit reporting bureaus (Transunion, Equifax, and Experian). Check all three to make sure the information on them is accurate. Then double check. If you see anything incorrect, report it to the appropriate agency by filing a dispute. This can take time, so make sure you check your report well before you plan on buying a home.
Get a Streak Going
Pay on time, every time!
Regardless of how much or how little debt you have, paying on time has the biggest impact on raising your credit score. It shows lenders you’re responsible and that you’ll likely keep paying on time in the future. If you have past-due bills, get on top of them as soon as humanly possible. You can even call your creditors when you’re ready to pay and see if they’ll take delinquencies off of your report. Even if they won’t: don’t sweat it. Just start paying on time, keep paying on time, and you’ll establish a meaningful streak.
Pay down debt
Part of your credit score is based on how much of your available credit you’re using. The less you’re using, the better. In a perfect world, you’ll be using less than 30% of your credit at any given time. That’s overall, but also per credit line. So, if you have a credit card with a $1000 limit but an $800 balance, you’re using 80% of that line of credit. Pay that one down faster than a card with a $10,000 limit and a $2,000 balance. But no matter how you pay down debt, remember to make payments on time, every time.
If credit card debt is the biggest issue affecting your credit score, you can also look into increasing your credit limits. Raising your limits reduces the percentage you’re using. But make sure to check with your creditors first to make sure that requesting a limit increase won’t be a hard inquiry on your credit report—and make sure that you’re not tempted to use that extra credit once you’ve got it. You can also look into consolidating your debt to see if it’s a good option for you.
Play the Long Game
You might feel impatient to raise your credit score, but keep your eye on the prize. The longer you make payments on time, the more of a positive impact on your score you’ll make. And the further in your past any hiccups are, the better. Things like bankruptcy and foreclosure impact your score less and less over time and may eventually be removed.
In the meantime, keep the number of hard inquiries on your credit report to a minimum. Hard inquiries happen when you do things like open a new credit card, take out a loan, or try to rent or buy property. Hard inquiries ding your score a few points each time and stay on your credit report for 12 months. Too many can be a red flag for lenders, so make sure you’re being discerning about when and why they happen.
Don’t beat yourself up for past hardships or mistakes. Once you’ve made a plan to improve your credit score, treat it like a game. Celebrate streaks of on-time payments. Give yourself an inexpensive reward for paying off a credit card. And keep going. If you can take an honest look at where you are, plan for where you want to be, and chart a realistic course to get there, your score will get to where you need it to be.