5 Proven Tips to Improve Your Credit Score

Credit score

I’m not going to insult your intelligence with the typical personal finance blog no kidding, psycho-babble “pay your bills on time” advice.  Today we’re going to talk about real credit improvement scenarios that our community has used to improve their credit scores.

Obvious caveat here: I’m trusting the validity of the stories. However, most seem to be consistent with guidance provided by myFICO.com, CreditKarma.com, Quizzle.com, and other like credit improvement websites.

No theory here—real stuff!

1. Check Your Credit Report

Your credit report is a dynamic compilation of reporting from all of your creditors. Credit bureaus are literally taking in millions of items of data every day and indexing that data to the appropriate consumers. As with any large amount of data processing errors are likely to occur—errors in creditor reporting and errors in credit bureau indexing.

A 2004 survey conducted by the U.S. Public Interest Research Group reported that an alarming 80% of credit reports contained errors. In contrast, a more recent 2011 survey [PDF], conducted by the Policy and Economic Research Council (PERC) found less than 1% of credit reports have errors.

This is a big difference in a relatively short period of time. Personally, I would tend toward the cautious side and implement the classic “trust, but verify” strategy.

In addition, there is the risk of identity theft. Fraudsters are still very aggressively targeting credit cards, loans, and even mortgages to commit fraud.

Checking your credit report regularly for errors and clues to fraud is your best defense against errant drops in your credit score. It could also help you make a quick improvement by fixing your credit report.

2. Lower Overall Credit Utilization Under 50%

Adjusting your credit utilization can be the quickest way to increasing your credit score. Many consumers miss this opportunity from a simple a lack of understanding.

The secret is really simple: The amounts you owe on credit cards and credit lines (i.e., Home Equity Line of Credit) make up 30% of your credit score calculation. Consequently, paying down even a little bit of your current balances (credit utilization) can make a big impact.

The prevailing wisdom is that keeping this total amount owed (your credit balance) below 50% of the total amount of credit you have available will significantly increase your credit score.

Here’s an example:

A reader recently shared with me that he improved his 750 credit score 30 points by only paying an extra $300 on his credit card. His scenario included one credit card with a balance of $1500 and a credit limit of $2500. By simply paying $300 down on the $1500 balance he dropped his total credit utilization under 50% and jumped his credit score to a 780 (see you can even improve really good credit scores).

The total amounts you owe on your credit cards and credit lines (i.e., Home Equity Line of Credit) should be less than 50% of your total available credit.

3. Lower Individual Credit Utilization Under 10%

Closely related to the 50% is another benchmark for individual credit cards and credit lines—below 10% credit utilization on each credit line.

This is why the debt snowball or debt stacking methods work so well for paying down debt and repairing your credit. Essentially you are systematically lowering each credit card or credit line below 10% credit utilization as you move your overall credit utilization below 50%.

4. Increase Your Credit Line

On those of your with good credit discipline should read the next tip. It mathematically works to improve your credit score; however, it could get you in trouble if you somehow think you just hit the credit lottery.

Call each of your credit card companies and ask them to increase your credit limit. This, for no money, will immediately lower your percentage of credit utilization on each credit card and overall.

Again, don’t use this tip to create a bigger problem. Simple use it for a quick victory for your credit score or possibly a quick boost to get a better interest rate on a mortgage or auto loan.

5. Start Building Credit

Believe it or many folks, especially younger people, simply need to start building credit to improve. If you have been living at home and don’t use credit cards, you may be a credit ghost. Remember your credit report is a compilation of credit reporting from your creditors. If you don’t owe anyone any money you may have a low or non-existent score.

In this case, your priority is to start build that credit. The best way is to get a few utility bills in your name (i.e., Cable, electricity, etc.) and a credit card that you use responsibly.  Do this sooner than later because history is a significant factor too. No reason to wait until you want to buy a home and then have to scramble to prove your credit worthy or pay a higher interest rate than necessary.


1. United States Public Interest Research Group – Mistakes Do Happen: A Look at Errors in Consumer Credit Reports

2. Policy and Economic Research Council (PERC) – United States Consumer Credit Reports: Measuring Accuracy and Dispute Impacts [PDF]

3. Federal Trade Commission: How to Dispute Credit Report Errors


1. Free Annual Credit Report: AnnualCreditReport.com

2. Federal Trade Commission – consumer response center: 877-382-4357

3. Equifax PO Box 740241, Atlanta, GA 30374-0241(800) 685-1111

4. Experian PO Box 2104, Allen, TX 75013-0949 (888) 397-3742

5. Transunion 760 W. Sproul Rd., Springfield, PA 19064-0390 (800) 888-4213

About Bill Rice

Hi! I'm Bill Rice, the founder and publisher of YourMoneyDrawer.com. I love making personal finance simple and fun. Do you have a question? Leaving a comment below is the fastest way to get an answer. We love comments!