How to Improve Your Credit Score: 6 Real Tips That Aren’t Just Paying Off Your Credit Card

want to improve your credit score?

7 steps to improve your credit score

We all know how vital a good credit score is. It enables or disables us from getting a loan or mortgage, applying for a credit card, and more. Having good credit is one of the most important facets of adulting.

Simply put, if you want access to better credit cards or interest rates, you need to work on improving your credit score.

You want to have a credit score of 700 or higher to be considered as having good credit. It gives you better creditworthiness and makes better avenues available to you. The good news is that it is possible to achieve.

Other credit-related resources:

When it comes to loans, you are considered more or less likely to repay based on your credit score. Naturally, higher scores correspond to lower interest rates.

At present, credit specialists consider any figure above 720 will bring in the best interest rate for you. Your credit score is very significant. But it’s important to understand that it’s not the only piece lenders look over to measure approvals. They also review employment history, yearly income, other debts, etc.

You can leverage a good credit score into better deals on loans, credit cards, and insurance premiums. Low credit scores will cause a loan to be approved at a higher rate, that, over a lifetime is quite pricey.

For example, someone with a 620 FICO score would pay $65,000 more on a $200,000 mortgage than someone with a 760 FICO score. If you have a good credit score, you’ll almost always qualify for the best interest rates. In turn, you’ll pay less — which I’m sure is something you want.

Stick around to find out more about ways to improve your credit score. 

Understanding the credit scoring system

The credit score aka FICO (Fair Isaac Corp) is a numerical figure that ranges between 300-850. It’s used to determine a person’s creditworthiness. Essentially, this score ranks a person on the probability they will be able to repay.

If you have what is considered poor credit, between 580-619, you are not alone.  In fact, 11.1% of Americans have FICO scores below 550. Millennials have an average credit score of 680, while baby boomers stand at an average of 736.

FICO credit score scale

What does having a poor credit score mean? Well, for one, higher interest rates on credit cards and loans. A low credit score can indicate a higher likelihood to default on a loan. Since this is riskier for the lender, they will charge you a higher interest rate.

It also means that your credit card, loan, or even rental applications are less likely to be approved for the same reason above.

What determines my credit score?

We know that credit scores are obtained by employing credit scoring models to analyze credit reports. The most commonly used credit scoring models are FICO and Vantage Score. They are able to ascertain the likelihood of someone to miss a payment. All of this leads to a score ranging in between 300 and 850. The factors that show up on a credit report, and consequently impact credit score, are:

Your payment/billing History

Your credit score is highly affected by your billing history. This includes your credit card bills, loans, and utility bills.

Amounts payable

The categorization of your credits, and how they match up to the extent of what you’re authorized to take out.

Years of credit

Since the seniority of your accounts can measure your capacity to repay, a lengthy credit history works in your favor.

Recent credit

The number of accounts you’ve opened recently along with how many inquiries have been made to your credit.

Credit types

The blend of accounts you have in hand including auto loans, mortgages, or other credit types.

1. Reduce credit card balances

Credit utilization is the ratio of total balance on all your credit cards compared to total of all credit limits. In other words, it looks at the limit you can borrow on your credit card. Then compares that limit to the amount you’ve spent on your card.

When credit balances are too high based on your credit limit, it has a negative effect on your score. In fact, the level of debt accounts for 30% of your total score. Multiple cards that are maxed out can have an even worse effect.

Good credit utilization is generally 30% or less and is paid off in full every month. If you are in a position where all your cards are spent to their limit, then it’s time to make a change. If you’re making just the minimum payment amount every month, it’s like using a squirt gun to put out a wildfire, the difference it makes is negligible.

Eliminate unnecessary purchases

First, review your expenditure. Where are you spending money that could be saved? Eliminate unnecessary purchases. Then use that extra money to put down more on your credit card balances. If you’re unable to eliminate enough purchases, then start thinking of ways to make extra money throughout the month. See our blog post about side jobs that can make you serious cash. 

Multiple cards with high or maxed-out balances? Start with the card with the highest interest rate. With a high interest rate, the longer you wait to pay it, the more you owe. Paying it off first will help you save more money over time. 

Get that first card paid down, then work on the next highest and so on. Again, this is going to be slow and steady and will take a lot of self-discipline. But reducing your credit balances will make a serious impact on improving your credit score.

Reduce spending temptation

Don’t let your payments go to waste by just raising your balances again by making unnecessary purchases. Shred your cards or keep them in a safe place that isn’t your wallet. You’ll cut back on the temptation of spending the money that you just made.

Spend tax returns wisely

Finally, tax returns are a great tool to pay down some high or past-due balances. Instead of spending away your tax returns this year, use it to help your financial future by paying down high interest credit cards or loans.

2. Make on-time payments 

Late payments can happen. But a late payment several times in a row on multiple accounts will cost you. Don’t let something as simple as not paying your bill on time bring your credit score down. Set up reminders on your phone or sign up for automatic payment. This helps ensure that you are making payments on time on a consistent basis.

If you have extra cash you want to put towards your balance throughout the month, go ahead and make a payment. It’s okay if it’s before your due date. Good payment history accounts for 35% of your score. Turn bad history into a good future by making your payments on time.

Better yet, pay early

If you’re asking why? It’s because of credit utilization. By consistently paying down your account balance, you’ll be able to keep your utilization below 10% pretty much all the time. Whereas if you choose to wait and pay it all at once, the utilization might spring upwards of 25% or more. Frequent payments help shrink your utilization ratio and propel your score on an upward trajectory.  

3. Limit applications and credit checks

Hard checks on your credit can ding your score. This can mean two things. Either you recently applied for something that requires a credit check, i.e., a traditional loan, car, mortgage, credit card, etc., or you’re checking your credit score too often.

If you are working on building your score back up, eliminate unnecessary credit checks. 

Getting your credit report is so important. That’s why I recommend doing each credit bureau one at a time. This allows you to monitor progress on a quarterly basis without hurting your score in the process. It is possible to access your credit score for free and we’ll show you how. Inquiries account for 10% of your score. This is not as high as other factors, but it can still make an impact.

Want to keep an eye on your score on a consistent basis? Of course, there is an app (or multiple) for that. Keep in mind that these won’t be 100% exact. But at the very least, they’ll be close and will notify you when your score improves or takes a dip on a month-to-month basis. I recommend the Credit Karma app. It can be found on Apple and Android app stores. 

4. Apply for a secured credit card

Obtaining a secured credit card is a great way to improve payment history. This is a solution where you make a deposit to “secure” the line of credit. Essentially working like a debit card rather than a traditional credit card. There’s a prepaid amount that you borrow from.

Adding a new account is only recommended if you make payments on time and stay under the 30% credit utilization level.

How to calculate credit utilization ratio

To calculate credit utilization ratio, add all the balances of your credit cards. Divide it by the sum of all your cards’ credit limits. Then, multiply your result by 100 to express it as a percentage.

Here’s what the equation looks like:

(Sum of credit card balances ÷ sum of credit limits) = credit utilization ratio

Credit utilization ratio x 100 = credit utilization ratio percentage

Let’s see that in action:

Say for example, you have two credit cards. One credit card has a $1,000 balance and $5,000 limit. The other card has a $200 balance and $3,000 limit. Add up the two balances and add up the limits.

$1,000 $200 = $1,200 total credit card balance

$5,000 $3,000 = $8,000 total credit card limit

Now divide your total credit card balance by your total credit card limit. Then, multiply it by 100 to see the result presented as a percentage.

$1,200 ÷ $8,000 = .15

.15 x 100 = 15%

Your credit utilization would be 15%. 

5. Become an authorized user on another card 

Do you have a friend or family member with solid credit? Are they willing to make you an authorized user on their account? If so, this can also be a great way to improve payment history.

Becoming an authorized user on another card is essentially piggy backing on someone else’s good credit to improve your own, it can be very beneficial for you. It can be a good way to build up credit consistently month-over-month.

Our best advice: If you become an authorized user on someone else’s account, don’t use it. In fact, if you get your own card on that account, shred it, or let them keep it. You would never want to have the temptation of using someone’s credit limit or risk jeopardizing their good credit.

6. Ensure rent & smaller bills are reported on your credit  

Thanks to a new rule, on-time rent payments can now be included in credit score. It’s up to your landlord to decide whether to report your on-time payments. With a little persuading, you might be able to get them to agree to report your on-time rent payments.

Sign up for Experian Boost. It suggests it can raise your FICO score instantly. What do you have to lose? Experian Boost, I learned, looks for on-time payments for routine monthly expenses, and adds them to your report. Are there other bills you have good payment history on?

Previously credit scores did not look at things like utility bills, cell phone bills, and streaming services (hint, hint: your Netflix account). With Experian Boost, reoccurring payments like those would be counted now. 

7. Consider consolidating your debt 

If you have high-interest debt like credit card debt for instance, it might be possible to roll several debts into one single payment with a lower interest rate. This is called debt consolidation.

That lower interest rate will lead to an overall reduction in total debt. For example, a $10,000 traditional loan, with 25% interest, that takes 5 years to pay off will ultimately cost $19,089. That’s $318 a month for 5 years. That same loan, with a slightly smaller interest rate of 20% will save you over $3,000. Instead, your loan total cost would be $14,898.49 over 5 years. Or, $248 a month for 5 years.

Debt consolidation also organizes debt in a way that makes it convenient to pay off quicker. Most of us have multiple bills with various payment amounts, interest rates, due dates etc. It makes sense to combine them into one. Consolidating your credit can be a great first step to get a handle on past due payments or high balances.

How long does it take to raise your credit score? 

In this instance, slow and steady wins the race. Realistically, credit takes several months to repair. Depending on what factors are impacting your credit score, it might take about two months before you see any change. It can take a few months, or even a year or two to see a big change in your credit score. So, don’t get frustrated if you’re not back to “outstanding” credit within 30 days.

If you’ve been consistently trying to improve your credit score by paying your bills on time, you obviously want to see results. Usually, you will see changes in your credit score once the information on your credit report updates.

Depending on whether positive or negative information is added to your credit report, your score is subjected to rise or fall. Consider availing a credit monitoring service like FICO Advanced. It helps keep an eye on your credit score.

The types of changes you’re making can impact how long it takes to affect your credit score as well. For example, improving your credit utilization will likely have the fastest effect. However, there are two ways to do that. Paying down your current debt is the optimal solution. Increasing your credit limit instead, might take longer for your score to increase. In addition, you’d have more credit to manage.

Improving your credit score takes time, but doing it right will leave a lasting positive impact. A better credit score is definitely worth the wait!

Resources to help you get started 

We believe that knowledge is power. That’s why we try to give you as much information as possible so that you can make smart choices. There are resources that you can access when trying to improve your credit score. These are designed to assist you in keeping track of your credit history and offer insight. We recommend using them as needed. They are listed below:

Annual free credit report

You are allowed one free credit report every 12 months that won’t hurt your credit score. It is advisable to make use of it to stay current on your credit information. 

You can access this by going to and requesting your free reports. Now, there is a little trick here. You can either pull a comprehensive report that includes all three of the major credit bureaus; Transunion, Equifax, and Experian, or you can request one at a time, so you can pull a free report more than once a year. I would recommend pulling one at a time. This will allow you to monitor your credit score throughout the year, rather than just once.

Once you’ve downloaded your credit report, print it out and analyze every part of it. If there are parts that you don’t understand or if something looks like it’s been incorrectly reported then you can dispute these charges or inquire for more information as to why they’re on there. You can do some research online or call a credit counseling agency to get more information. Now that you’ve done preliminary work, let’s get that score up!

Credit Karma app

The Credit Karma App is a great tool. Download it on your phone to track your credit score. You’ll get updates on progress or inquiries. The app is available to both Apple and Android users. Best of all, it’s very user-friendly. See open accounts, payment history, and a compilation of credit scores from all three credit bureaus. Not only that, but Credit Karma will also provide tips on improving your credit score. 

Learn more about credit and loans

In conclusion, I want you to be aware and informed regarding credit scores and how to enhance them. A good credit report and high credit score can make way for greater loan opportunities. I recommend doing some research. To get started, check out some of our other credit resources listed towards the top of this page

This blog was originally posted January 22, 2018 and has since been updated. 

Net Pay Advance is a licensed loan provider, locally owned and operated in Wichita, Kansas. Our No. 1 priority is helping you, the customer, by providing access to the cash you need and helping support financial independence goals with valuable, informational, and entertaining content. Stay up-to-date on our posts by following the Net Pay Advance Facebook, Instagram, and Twitter pages. Our organization is committed to transparency; learn more about our authors and editorial policy. The information provided within this blog is for educational purposes only and should not be construed as financial or legal advice. Please contact us if you have any questions.

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