How to Raise Credit Score and Fix Bad Credit

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Regardless of your financial situation, your credit score is an important aspect of your finances. This is especially true if you’re planning to borrow money for any reason. With a better credit score, you could qualify for lower interest rates when you borrow, e.g., home mortgage, car loan, and other types of loans. As such, it’s a good idea to do what you can to improve your credit score.

If you don’t know your score yet, here’s how you can get your credit score for free. It only takes a few minutes to sign up and find out.

How Your Credit Score is Determined

Before you can improve your credit score, you should have a basic understanding of how credit bureaus calculate your credit score. According to myFICO™, five key factors influence your score.



Factors Weight
Payment History. Do you repay your debt on time? Late payments, collections, and bankruptcy are also included here. 35%
Credit Utilization. How much money do you owe compared to your credit line? 30%
Length of Credit History. How long is your track record? How old is your first credit card? 15%
Credit Mix. Do you have different types of loan — e.g., mortgage, car loan, business loan, revolving credit, etc. 10%
New Credit. Do you have a lot of applications for credit recently? 10%

Improving Your Credit Score

The first step to improve your credit score is to check your credit reports. You can check your reports for free at AnnualCreditReport.com. Review your reports carefully. If you see any reporting error, contact the credit bureau to dispute the line item and ask them to correct the mistake.

Next, since you know that factors that affect your credit scores, you can put together guidelines to help you improve your credit.

Payment History

The general rule of thumb here is to make sure you can afford the payments before you take on a debt, and once you have it, to make all payments on time.

  • Make all of your payments on time. The easiest way is to pay as soon as you get the statement or set up automatic bill payments.
  • Avoid collections. Before adding new debt, make sure you can pay everything back. If you need to cut expenses to make your debt payments, then you have to do it.
  • Avoid bankruptcy, foreclosure, and short sale. These derogatory items stay on your credit report for 7 to 10 years.
  • Have insurances in place. Make sure you’re adequately insured for health, dental, home, and auto insurance to avoid incidents that could cause you to default on your loan payments.
  • Emergency Fund. Make sure you have an emergency fund to help you through rough financial times. Experts recommend a fully-funded emergency fund that has enough money to cover 3-6 months of living expenses.

Credit Utilization

  • Pay down your debt. This is by far the best way to improve your credit and overall finances. Just try to get out of debt as best as you can. The only thing that you should owe is your mortgage and nothing else.
  • Do not max out any of your credit cards.
  • Do not get store credit cards which often offer low credit limits — sometimes equal to your purchase amount, which automatically gives you a 100% utilization rate for that card.
  • Ask your credit card issuers for a higher credit limit. This is a hack to give you a short-term boost to your credit and not a long-term solution.

Length of Credit History

Credit Mix

  • There’s no sense in getting into debt to improve your credit mix, but having a wider variety of different types of debts and loans do help increase your credit score.

New Credit

  • Avoid credit hard pulls. Understand the difference between a soft pull and hard pull. Avoid activities that create a hard pull because it impacts your score negatively.
  • Rate shop within 30 days. When shopping for the best car loan rate or mortgage rate, do all your rate shopping in 30 days. Each inquiry will show on the credit report, but all the inquiries only count against you once.

You need to note that it takes time for your credit score to improve, so please be patient.

Bonus Tips

In addition to the ideas above, you can also try some of these ideas:

  • Use the Bureaus’ Online Dispute Process. Some people have said that they get quicker results this way, but make sure you still get printouts of everything you are doing.
  • Try to get Bureaus to add Positive Accounts – Your credit reports do not have all of your accounts. For example,
  • Use Credit Builder Loans. Credit builder loans allow you to borrow a relatively small sum of money, e.g., $500 to $1,000. Unlike a typical loan, you make your “loan payments” to the lender first, the lender then gives you the money once you paid your loan in full. These payments appear on your credit report and help increase your credit score.
  • Secure Credit Cards. You get a line of credit from a secured credit card, which is guaranteed by your bank account, such as certificates of deposit or savings account. The balance in your bank account is the credit limit. As you use your card, the payments become part of your payment history and can raise your scores.

Do you know another credit score improvement tip? Please share yours here.

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Trudy HooksNickMayank GuptaCharles Barattaberyl maureen hammond Recent comment authors
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After recently reading I Will Teach You to be Rich I used one of his techniques to hopefully raise my FICO score. I have no CC debt and pay on time every month and called up and asked them to raise my credit limit. I have no need for the raised limit other than it betters my ratio and could help my score a bit.

Ryan Guina

Very solid tips! The only things I will add is to have both diligence and patience. It can take some time to see your score change, and how quickly and how much your score changes depends on many factors.


Uh… While I agree that a good credit score is better than a bad credit score, the only thing a good credit score means is that you like debt and are successful at managing lots of it. So I disagree with the opening sentence. I don’t feel my credit score is an important part of my finances. I’ve put financially sound principles into my life over the past years and was able to pay cash for my last car. My goal is in 3-5 years have my mortgage (my last debt remaining) paid off at which point all future house… Read more »


Solid advice, but there is a great deal of time and patience involved in improving scores . . .


Knowing about the various constituents that constitute your credit score makes credit score repair an easier process.

beryl maureen hammond
beryl maureen hammond

knowing how your credit score is determined makes it easier to improve your score.

Charles Baratta
Charles Baratta

This really can be an issue with a small business owner attempting to obtain an sba, or traditional small business bank loan for working capital to grow or finance their business. In these times many merchants we talk to, have beaten up their personal credit pretty badly, hence low fico scores. However, as a merchant business cash advance funding group, we are able to get businesses the money they need, to stay in business. There are some great tips videos on my blog.

Mayank Gupta
Mayank Gupta

As mentioned, Paying your credit card bill on time also helps in improving credit score fast and utilizing secured loans also helps in improving your credit score


Rebuilding your credit after a disaster can be a long process, but there are a few steps you can take to help increase your score within a couple months. Pay Off Your Credit Cards And Lines Of Credit – This is one of the fastest ways to increase your score and it will also lower your debt utilization ratio, the difference between how much credit you’re using and the credit limits. Paying off debt with another loan would show up on your credit report and could do more damage than good, even if it is for a lower interest rate.… Read more »

Trudy Hooks
Trudy Hooks

I recently received my credit scores which actually weren’t bad but could be better. I noticed that one of the reasons given for not receiving a higher score is that there was a delinquency in the past on something. I can only think of a couple of times when I didn’t pay my Am Ex bill on time. Is that really the reason? In all the years of having that card it seems to me to be such a insignificant default!!! How do I dispute such a demerit on my credit history?

How to Raise Credit Score and Fix Bad Credit

by Pinyo Bhulipongsanon time to read: 4 min