10 Tips to Improve Your Credit Score and Save Money

Your credit score is a three-digit number that lenders use to evaluate your ability to repay any money you borrow. It is based on information in your credit report, such as your payment history, amounts owed, credit history length, credit mix and new credit. Your credit score can range from 300 to 850, depending on the scoring model and the data source used.

Why is your credit score important? Because it can affect your finances and your ability to achieve your goals, such as owning a home or buying a car. A higher credit score can help you qualify for better interest rates, lower fees, higher credit limits and more favorable terms on credit products. A lower credit score can make it harder or more expensive to access credit, or even prevent you from getting approved at all.

Therefore, it is wise to monitor and improve your credit score regularly. Here are 10 tips to help you do that and save money in the long run.

10 Tips to Improve Your Credit Score

Tip 1: Check your credit score and report for free

The first step to improving your credit score is to know where you stand. You can check your credit score and report for free from various sources, such as:

  • ClearScore: You can get your VantageScore® for free and see a wide range of offers tailored to your score in the ClearScore marketplace. VantageScore® is another common scoring model that competes with FICO®.

You can also get a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax and TransUnion) once every 12 months from AnnualCreditReport.com. Your credit report contains detailed information about your credit accounts, payment history, inquiries and public records.

Tip 2: Review your credit report for errors

Once you have your credit report, you should review it carefully for any errors or inaccuracies that could be hurting your credit score. Common errors include:

  • Wrong personal information, such as name, address or Social Security number
  • Accounts that do not belong to you or are duplicated
  • Payments that are reported as late or missed when they were not
  • Balances or limits that are incorrect or outdated
  • Negative items that should have been removed after a certain period of time

If you find any errors on your credit report, you should dispute them with the credit bureau that issued the report. You can do this online, by phone or by mail. You will need to provide proof of the error and request that it be corrected or removed. The credit bureau will investigate your dispute and notify you of the outcome within 30 days.

Tip 3: Pay your bills on time

One of the most important factors that affect your credit score is your payment history. This shows how consistently you pay your bills on time and in full. Payment history accounts for 35% of your FICO® Score and 40% of your VantageScore® .

Paying your bills on time can help you build a positive payment history and boost your credit score. On the other hand, paying late or missing payments can damage your payment history and lower your credit score. Late payments can stay on your credit report for up to seven years.

To avoid missing payments, you should set up reminders or automatic payments for your bills. You should also contact your creditors if you are having trouble making payments and ask for a hardship plan or a payment extension.

Tip 4: Reduce your debt

Another key factor that affects your credit score is your amounts owed. This shows how much debt you have compared to how much credit you have available. Amounts owed accounts for 30% of your FICO® Score and 20% of your VantageScore® .

Reducing your debt can help you improve your amounts owed and increase your credit score. It can also help you save money on interest charges and fees. To reduce your debt, you should:

  • Make more than the minimum payments on your credit cards and other loans until you pay off more and more debt.
To use this method, you should:
    • List all your debts (except your mortgage) from smallest to largest balance.
    • Pay the minimum due on each debt every month and add extra money (at least $100) to paying off the smallest debt.
    • Once the smallest debt is paid off, roll over the amount you were paying on it to the next smallest debt, creating a snowball effect.
    • Repeat this process until all your debts are gone.

Tip 5: Keep your credit utilization low

Your credit utilization is the percentage of your available credit that you are using. For example, if you have a credit card with a $1,000 limit and a $500 balance, your credit utilization is 50%. Your credit utilization affects both your amounts owed and your credit mix, which account for 30% and 10% of your FICO® Score respectively.

Keeping your credit utilization low can help you improve your credit score and show lenders that you are not overextended. A general rule of thumb is to keep your credit utilization below 30%, but lower is better. To lower your credit utilization, you should:

  • Pay down your balances as much as possible
  • Request a credit limit increase from your creditors
  • Avoid closing old or unused accounts, as this can reduce your available credit
  • Spread out your charges among different accounts

Tip 6: Diversify your credit mix

Your credit mix is the variety of credit types that you have, such as revolving credit (credit cards) and installment credit (loans). Your credit mix accounts for 10% of your FICO® Score and shows lenders that you can handle different kinds of credit responsibly.

Diversifying your credit mix can help you improve your credit score and demonstrate your financial flexibility. However, this does not mean that you should apply for new credit just for the sake of it. You should only take on new credit if you need it and can afford it. Some examples of different types of credit are:

  • Credit cards
  • Personal loans
  • Student loans
  • Car loans
  • Mortgages

Tip 7: Limit new credit inquiries

Every time you apply for new credit, the lender will perform a hard inquiry on your credit report to check your creditworthiness. A hard inquiry can lower your credit score by a few points and stay on your report for up to two years. Too many hard inquiries in a short period of time can signal to lenders that you are desperate for credit or a riskier borrower.

Limiting new credit inquiries can help you preserve your credit score and avoid unnecessary rejections. You should only apply for new credit when you really need it and when you are confident that you will be approved. You should also shop around for the best rates and terms within a short time frame (usually 14 to 45 days), as multiple inquiries for the same type of credit within this window are typically counted as one inquiry.

Tip 8: Become an authorized user

Becoming an authorized user on someone else’s credit card account can help you improve your credit score by adding positive information to your credit report. As an authorized user, you can use the cardholder’s account but you are not legally responsible for paying the balance. The cardholder’s payment history, balance and limit will be reported on your credit report as well as theirs.

Becoming an authorized user can help you boost your payment history, amounts owed and credit history length, which account for 65% of your FICO® Score combined. However, this strategy only works if the cardholder has a good payment history and a low balance on their account. Otherwise, their negative information could hurt your score instead.

To become an authorized user, you need to find someone who trusts you and who has a good credit history with their card issuer. This could be a family member or a close friend. You should also make sure that the card issuer reports authorized user activity to the credit bureaus. You should also agree on how you will use the account and how you will repay any charges that you make.

Tip 9: Build or rebuild your credit with a secured card or a loan

If you have no or poor credit history, you may find it hard to get approved for regular unsecured credit cards or loans. In that case, you may want to consider a secured card or a loan to build or rebuild your credit.

A secured card is a credit card that is backed by a cash deposit, which serves as collateral in case you default on payments. The deposit is usually equal to your credit limit and is refundable when you close the account or upgrade to an unsecured card. A secured card works like any other credit card and can help you establish a payment history and a credit mix. However, you should look for a secured card that has no annual fee, a low interest rate and reports to all three credit bureaus.

A secured loan is a loan that is backed by an asset, such as a car or a savings account, which serves as collateral in case you default on payments. The loan amount is usually equal to or less than the value of the asset and is repayable in fixed monthly installments. A secured loan can help you establish a payment history and a credit mix. However, you should look for a secured loan that has no origination fee, a low interest rate and reports to all three credit bureaus.

Tip 10: Stay on top of your credit situation

The last tip to improve your credit score is to stay on top of your credit situation and monitor your progress. You should check your credit score and report regularly to see how you are doing and what areas you need to work on. You should also watch out for any changes or errors that could affect your score and take action if needed.

You can use various tools and services to track your credit situation, such as:

  • Credit score apps: These are mobile apps that let you access your credit score and report anytime, anywhere. Some examples are Credit Karma, Credit Sesame and WalletHub.
  • Credit monitoring services: These are services that alert you of any changes or activities on your credit report, such as new accounts, inquiries or fraud. Some examples are Experian IdentityWorks, IdentityForce and LifeLock.
  • Credit education resources: These are resources that provide tips and advice on how to improve your credit score and manage your finances. Some examples are NerdWallet, Investopedia and The Balance.


Q: How long does it take to improve your credit score?

A: It depends on various factors, such as your starting point, your goals, your actions and the scoring model used. Generally speaking, it can take anywhere from a few months to several years to improve your credit score significantly. However, some changes can have an immediate impact on your score, such as paying off a large balance or removing an error.

Q: How much can I save by improving my credit score?

A: It depends on how much you borrow, how long you borrow for and what interest rate you get. Generally speaking, the higher your credit score, the lower your interest rate and the more money you can save over time. For example, according to FICO®, a borrower with a 760-850 FICO® Score could get an average interest rate of 2.8% for a 30-year fixed mortgage of $200,000 in April 2023. This would result in a monthly payment of $821 and a total interest cost of $95,609 over the life of the loan. On the other hand, a borrower with a 620-639 FICO® Score could get an average interest rate of 4.7% for the same loan. This would result in a monthly payment of $1,037 and a total interest cost of $173,427 over the life of the loan. That’s a difference of $216 per month and $77,818 in total interest.

Q: What are some things that can hurt your credit score?

A: Some things that can hurt your credit score are:

  • Paying late or missing payments
  • Having high balances or maxing out your cards
  • Applying for too many new accounts in a short period of time
  • Closing old or unused accounts
  • Having only one type of credit
  • Having negative items on your report, such as collections, bankruptcies or foreclosures


Improving your credit score can be challenging but rewarding. By following these 10 tips, you can boost your credit score and save money on various credit products. You can also enjoy other benefits of having good credit, such as easier access to housing, utilities and employment opportunities. Remember that building good credit takes time and discipline, but it is worth it in the end.

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