Improving your credit score is often more about dedication and time than it is about income.
“You don’t have to make a lot of money to have a good credit score; it’s just about managing your credit and paying bills on time,” said Andrea Woroch, a nationally recognized money-saving expert.
Here are six things you can do to start repairing your credit right now:
You probably already realize your score isn’t great, but do you actually know what’s behind that number? Check your credit report to find out why your score is low.
“You can get a free credit report online instantly, and it won’t damage your score. I recommend signing up for CreditKarma to see where you stand,” said Woroch.
The report will include your personal information, lines of credit, inquiries from lenders and any bills you have in collections. Make sure these details are accurate — around one in four Americans find mistakes on their credit report that bring down their scores.
“You have a right to dispute these errors. Call the credit bureaus to make a claim,” said Woroch. “If you see fraud, you might need to put a temporary freeze on your credit as you work to fix the situation.”
Paying your bills on time makes a big impact when it comes to raising your credit score. Even sending the check a couple of days late can cause your score to drop.
“It’s not just your credit card that impacts your credit score — it’s all your bills. Stay on top of your payments,” said Woroch.
Worried you might forget when bills are due? Writing down the dates on your calendar, scheduling reminders on your phone or signing up for automatic payments can help keep bills from slipping through the cracks.
If you’re behind on your payments, don’t just ignore the bills and hope they go away. (They won’t.) Call the company and ask about repayment plans.
“You need to find out what your options are. A student loan provider may be able to offer you a deferment, a credit card company might be able to reduce your interest rate and other lenders might be able to reduce your monthly payments,” said Woroch.
Making your payments on time and showing companies that you’re willing to pay what you can when times are tough will help improve your credit score.
Even if you’re making your minimum payments on time, carrying a high balance on your credit cards can put a dent in your score. Boost it by bringing down your balances.
“Ideally, you want to keep your balance at 30 percent or less of your available credit,” said Woroch. “People who constantly max out their cards look like high risks to creditors, and that can hurt your credit score.”
You should start noticing improvements in your credit score once you reduce the amount you owe.
When you finally bring your balance to zero, should you cancel the credit card? Not necessarily, said Woroch.
“The length of time you’ve had credit impacts your credit score. Keeping your old cards open allows you to establish a lengthier credit history and keep your available credit high,” she explained.
You might consider closing an old credit card if it has an annual fee or you can’t resist the temptation to rack up more debt. Otherwise, keeping unused credit cards open is a great strategy for raising your credit score.
“You might want to put one small bill on the credit card, such as a Netflix subscription, just to show that you’re still using it,” added Woroch.
Every time you open a new line of credit, the lender runs something called a “hard inquiry” on your credit report. This can knock you down a few points, so it’s best to avoid applying for new credit cards when you’re trying to fix your credit score.
“Hard inquiries don’t make a huge impact, but if you’re constantly taking advantage of savings by opening up store credit cards, you can find yourself in a pickle. Instead, use discounts and coupons if you want to save money when shopping,” said Woroch.
Limit your hard inquiries to times when you can’t avoid them, such as applying for a mortgage or car loan — not weekend shopping trips.
Does your spouse or relative have a great credit score? You can benefit from it by becoming an authorized user on one of their credit cards.
“If you trust them and they trust you, becoming an authorized user is a great opportunity. It can increase your available credit and lengthen your credit history,” said Woroch.
However, keep in mind that if they miss a payment on a card you’re authorized to use, it won’t just impact their credit score — it can hurt your score, as well. Only agree to be an authorized user with a cardholder who’s truly responsible.
There’s no magic pill when it comes to how to fix your credit score. But by making on-time bill payments, reducing your debt and building credit history, you can eventually work your way toward a score that makes you proud.