How To Increase Your Credit Score in 7 Fast Ways (2024 Guide)

If you’re searching for how to improve your credit score, be aware that there’s no quick fix. However, you can boost your credit score with the major credit agencies by using the seven tips below.

It’s helpful to understand what’s working in your favor and what’s not while you learn how to improve your credit score. Your credit report will highlight potential issues that drag your score down, such as high credit card balances and late payments.

Action item: Get your free credit reports at AnnualCreditReport.com, a site that’s jointly run by Experian, Equifax and TransUnion. Your credit score won’t be on your credit report. A financial institution like your credit card company may tell you your score, but if not, you can get it from one of the credit bureaus for a fee.

This might seem daunting if you’re searching for how to improve your credit score, but it’s absolutely critical. Late and missed payments damage your credit, and they tend to pile up if they’re left unchecked.

Action item: Pay your bills before they’re due, and set up automatic payments on accounts that allow it. Some companies will let you change your monthly payment date, which can also help you avoid late or bounced payments.

If you’re behind on payments to your creditors, you may be able to set up payment plans to cover all or part of your debt. This will show that you’re working to improve your credit score and become a more responsible borrower.

Action item: Stick to the new payment schedule. This could provide yet another incentive for you to learn how to improve your credit score, as defaulting on your debt would further damage your credit.

Aim to have as few hard inquiries on your credit report as possible. Applying for a new credit card or loan requires a hard inquiry, which can temporarily hurt your score.

Action item: Apply for new credit as sparingly as possible. Having many hard inquiries for different types of credit within a short period of time can make lenders view you as a riskier borrower in the future.

Keeping credit accounts open might seem counterintuitive if you’re thinking about how to improve your credit score. But closing them isn’t necessarily the right choice. For instance, while closing a credit card could reduce the debt you carry, it could also reduce the average age of your accounts and increase the percentage of your available credit you’re using.

Action item: Pay down revolving debt like credit cards and home equity lines of credit, but consider keeping the accounts open. Keep in mind that creditors may close revolving accounts that have little or no activity.

Your credit utilization ratio, also known as your debt-to-credit ratio, is the amount of revolving credit you use divided by your total credit limit. Personal finance experts recommend keeping your credit utilization ratio under 30%, but it’s best to get it as low as possible.

Action item: Reduce your spending on credit cards and pay the bills at least twice a month to have a smaller percentage of your total credit limit outstanding at any given time. You could also ask for a limit increase, but it may not be approved if you have bad credit and are searching for how to improve your credit score.

Having multiple types of credit — such as a secured credit card, a refinanced auto loan and a mortgage payment — is good for your credit score. Just make sure to pay your bills on time, or the downsides of holding multiple types of credit could outweigh the potential benefits.

Action item: Diversify the types of accounts on your credit report, but don’t apply for many credit types within a short time frame. Doing so could lead to multiple hard inquiries that make your credit score drop.

While we have given you some methods to improve your credit score step by step, knowing what a credit score is, what makes up the score, and what a good score to shoot for is can help you along your journey. We will explain these items in the sections below.

What Is a Credit Score?

A credit score is a number that indicates your creditworthiness to lenders. FICO^® has the most widely used scoring model, which ranges from 300 to 850. Your credit score is based on your credit report, which takes a more extensive look into your credit use over time. Equifax, Experian and TransUnion are the three main credit bureaus that compile credit reports on individuals.

It’s essential that you learn how to improve your credit score because credit card issuers and other lenders use it when deciding whether to approve requests such as for preapproved car loans. They also strongly consider your score when determining your interest rate.

How Is a Credit Score Calculated?

Multiple factors play a role in deciding your creditworthiness, which is usually indicated by your FICO score or your VantageScore^Ⓡ. Below, we’ll break down the factors that make up a FICO score:

Reading your credit report can provide valuable information as you learn how to improve your credit score. The sooner you learn where you stand, the sooner you can start the process of credit repair.

In FICO’s models, a good credit score is 670 or higher. Keeping your credit score as high as possible makes it easier to qualify for new credit and receive lower interest rates on products such as auto loans and student loans.

Below are FICO’s credit ratings and how lenders typically view them:

Learning how to improve your credit score could save you hundreds or thousands of dollars since borrowers with excellent credit get the lowest interest rates. That’s because credit scores inform lenders of how likely you are to repay loans that are offered to you.

Having fair or poor credit may not get you denied by all lenders, but you might only qualify for higher interest rates. Check average auto loan interest rates by credit score to see how much less you could pay if you discover how to improve your credit score.

While your current score may not be the best, there are plenty of methods to increase your rating over time to give you better rates and terms. Making sure to make payments on time and having a wide diversity of well-managed credit lines ensures you are on the right track. Once you get to a place where you are ready to finance, we recommend comparing multiple lenders to get the best deal.

Auto Loan Options for People With Low Credit Scores

If you’re still learning how to improve your credit score but need to buy a car, we recommend Bank of America and Auto Credit Express for bad credit auto loans. These providers typically offer competitive annual percentage rates (APRs) and high rates of approval.

Bank of America: Top Choice for Bad Credit

Borrowers with poor credit history usually won’t have issues getting auto financing through Bank of America, which often offers a generous approval process. The company has excellent financial strength, so your auto loan would be held by a reputable provider that can easily cover your needs.

Bank of America only finances vehicles that are less than 10 years old, have fewer than 125,000 miles on the odometer and are worth at least $6,000. You may not receive the lowest APRs on the market from Bank of America, but you’re more likely to get approved.

The Bank of America auto refinance options might suit you well if you’re hoping to get a better rate on your current auto loan.

Source: Capital One

Auto Credit Express: Good Option for Bad Credit

Auto Credit Express is a loan broker that connects people of nearly any credit score with direct providers. There’s no minimum FICO credit score to be eligible for loans through Auto Credit Express, as it approves or applicants drivers on an individual basis.

You may have a pleasant experience when getting a loan from Auto Credit Express, which has 4.6 out of 5.0 stars on Trustpilot. Over 80% of the company’s more than 3,300 customer reviews give it an “excellent” rating, showing that it serves the majority of drivers well.

Read more: Auto Credit Express review

Below are some frequently asked questions about improving credit scores and building credit:

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

• Reputation: Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
• Rates: Auto loan providers with low APRs and high loan amounts scored highest in this category.
• Availability: Companies that cover a variety of circumstances are more likely to meet consumer needs.
• Customer experience: This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness, friendliness and helpfulness of each warranty company’s customer service team based on our shopper analysis.

Our credentials:

• 300+ hours researched
• 25 companies reviewed
• 2,000+ consumers surveyed

*Data accurate at time of publication.