A bad credit score won’t stop you from surviving, but it will make life more complicated and more expensive.
From higher interest rates to being denied rental housing or even a cell phone plan, poor credit can quietly drain your wallet and limit your options.
On the other hand, a good credit score is a powerful financial tool that can unlock better rates, lower insurance premiums, and greater financial freedom.
In this guide, we’ll explore:
Why credit scores matter
The real-world benefits of having good credit
15 actionable strategies to improve your credit score starting today
What Is a Credit Score?
A credit score is a three-digit number ranging from 300 to 850 that lenders use to evaluate how likely you are to repay borrowed money.
The most common scoring model is the FICO score, which considers:
35%: Payment history
30%: Credit utilization
15%: Length of credit history
10%: Credit mix
10%: New credit inquiries
Why a Good Credit Score Is So Important
Having a high credit score goes far beyond qualifying for loans. Here are some everyday situations where your credit score plays a crucial role:
Lower Interest Rates on Loans and Credit Cards
The higher your credit score, the lower your interest rate, plain and simple. Lenders view people with high credit scores as less risky, which means they’re more willing to offer loans at favorable terms.
Over the life of a mortgage or auto loan, even a small difference in interest rate can translate into tens of thousands of dollars in savings.
For example, a borrower with excellent credit may receive a mortgage interest rate of 5%, while someone with poor credit might pay 7% or more for the same loan amount, potentially adding years of extra payments or thousands in added interest.
The same principle applies to credit cards. Good credit can help you qualify for cards with low or 0% introductory APR offers, reducing the cost of carrying a balance and making it easier to pay down debt faster.
Simply put, better credit means better borrowing power.
Better Insurance Rates
Many people don’t realize that their credit score can directly impact how much they pay for insurance, but it does.
Insurance companies often use a version of your credit score, known as a credit-based insurance score, to help determine your risk level. Statistically, people with higher credit scores tend to file fewer claims, so insurers reward them with lower premiums.
This applies to auto, homeowners, and even renters insurance. On the flip side, if you have a low credit score, you may be seen as a higher risk, even if you’ve never filed a claim, resulting in significantly higher monthly costs.
In some cases, people with poor credit may pay up to twice as much as someone with excellent credit for the exact same coverage.
Improving your credit score not only helps you save on loans, but it can also reduce the amount you spend protecting your assets.
Easier Rental Applications
Your credit score plays a big role when you’re trying to rent a home or apartment. Landlords use it as a quick way to gauge whether you’re likely to pay rent on time.
A strong credit score signals financial responsibility and can increase your chances of getting approved without any issues. On the other hand, a low score may raise red flags.
You could be denied the rental altogether, asked for a larger security deposit, or even required to have a co-signer.
In competitive housing markets, where multiple applicants are vying for the same unit, a good credit score can give you the edge.
By maintaining a solid credit history, you make the rental process smoother, faster, and less stressful, giving you more flexibility and choice in where you live.
Access to Premium Credit Cards and Rewards
Top-tier credit cards are more than just a payment method, they’re financial tools loaded with valuable perks.
These premium cards often offer generous cashback programs, travel rewards, airport lounge access, concierge services, and higher spending limits. But they’re not available to everyone.
Credit card issuers typically reserve these benefits for applicants with good to excellent credit, usually a score of 700 or higher.
If your credit score is below that threshold, you may only qualify for basic cards with fewer benefits, higher interest rates, and lower credit limits.
By improving your credit score, you gain access to cards that not only save you money through rewards but also offer features that can make travel, shopping, and everyday spending more convenient and enjoyable.
These cards can even help build your credit further, if used responsibly.
Lower Utility Deposits
When setting up essential services like electricity, water, gas, or internet, utility providers often perform a credit check to assess your reliability.
A good credit score signals that you’re likely to pay your bills on time, which means they may waive the security deposit entirely or charge only a small fee.
However, if your credit score is low, the utility company may view you as a financial risk and require a hefty upfront deposit, sometimes hundreds of dollars, before activating service.
This can be especially burdensome when you’re moving into a new home and already facing other upfront costs like rent, moving fees, or furniture expenses.
By maintaining a strong credit profile, you can keep more money in your pocket and avoid unnecessary financial obstacles when accessing everyday essentials.
Better Employment Opportunities
Your credit score isn’t just for lenders, it can also influence your job prospects. In certain industries, particularly finance, government, and security-related fields, employers may conduct a credit check as part of the hiring process.
While they won’t see your score, they’ll review your credit report for signs of financial responsibility, such as timely payments, low debt, and the absence of collections or bankruptcies.
Employers may view poor credit as a potential red flag, especially for roles involving money management, sensitive data, or security clearance.
A strong credit history, on the other hand, can enhance your professional image, demonstrating that you manage your finances with discipline and reliability.
Keeping your credit in good shape ensures that you’re putting your best foot forward, not just with lenders, but with potential employers too.
15 Ways to Improve Your Credit Score
Improving your credit doesn’t have to be complicated. These 15 proven strategies can help you raise your score steadily and sustainably.
1. Piggyback on Someone Else’s Good Credit
If you’re just starting out or trying to rebuild your credit, becoming an authorized user on someone else’s well-managed credit card account can give your credit profile an instant boost.
This strategy works because the credit card’s history, such as payment timeliness, credit limit, and balance, can be reported to your credit file, even if you never use the card yourself.
When you’re added as an authorized user, the age of the account and its payment history become part of your credit report. That means if the account is several years old, has always been paid on time, and maintains a low balance, your credit score can benefit from those positive factors.
However, this tactic only works if the primary cardholder is financially responsible. If they miss payments or carry high balances, those negatives can hurt your credit too.
That’s why it’s critical to choose someone you trust, like a parent, sibling, or spouse, who has a proven track record of excellent credit management.
Pro Tip: Before being added, confirm that the card issuer reports authorized users to the credit bureaus, some don’t, which would make the strategy ineffective.
2. Keep Old Accounts Open
Your credit score isn’t just about how you use credit, it’s also about how long you’ve used it. The age of your credit accounts plays a key role in the “length of credit history” portion of your credit score, which makes up about 15% of your total FICO score.
That’s why keeping older accounts open, especially credit cards in good standing, can positively impact your score.
Even if you no longer use a particular credit card regularly, closing it could hurt you in two ways:
It reduces your average account age, which may lower your score.
It decreases your total available credit, which can increase your credit utilization ratio (the amount of credit you’re using compared to your total limit).
Unless there’s an annual fee you can’t justify, consider keeping your old accounts open and active by making small recurring purchases (like a subscription or a utility bill) and paying them off in full each month.
Pro Tip: If you’re worried about inactivity, set a calendar reminder to use the card once every few months so the issuer doesn’t close it automatically.
3. Set Up Automatic Payments
Payment history is the most important factor in your credit score, making up 35% of your FICO score. Just one missed or late payment can drop your score significantly and stay on your credit report for up to seven years.
That’s why automating your payments is one of the simplest and most effective ways to protect your credit.
Most banks, credit unions, and credit card companies offer free automatic payment options, allowing you to schedule monthly payments in advance. You can usually choose to pay the minimum amount due, the full statement balance, or a custom amount on a recurring basis.
Even if you’re tight on cash, setting up auto-pay for at least the minimum payment ensures your account stays in good standing and your credit score remains protected.
It’s a safety net that helps you stay organized, avoid costly late fees, and maintain a strong credit history.
Pro Tip: Pair auto-pay with reminders to manually review your statement each month. That way, you stay in control of your finances while avoiding late payments.
4. Make Multiple Payments Each Month
Your credit utilization ratio, the amount of credit you’re using compared to your total credit limit, accounts for 30% of your FICO credit score.
Keeping this ratio low (ideally under 30%, and best under 10%) signals to lenders that you’re managing credit responsibly.
Here’s the catch: credit card issuers typically report your balance to the credit bureaus once a month, usually around the statement closing date. So even if you pay your bill in full right before it’s due, the reported balance might still look high, especially if you’ve been using your card heavily for everyday purchases.
Making multiple payments throughout the month helps lower your reported balance at any given time, which keeps your utilization low and improves your score.
For example, if your card limit is $3,000 and you’ve charged $2,000 already this month, making an early payment of $1,500 before the closing date will dramatically reduce your utilization, and boost your credit health.
Pro Tip: Consider aligning mid-month payments with your paydays to keep your cash flow smooth while improving your credit profile.
5. Request Goodwill Deletions
Everyone makes mistakes, but in the world of credit, even a single missed payment can have a lasting impact.
Fortunately, if you’ve generally been a responsible borrower, you may be able to request a goodwill deletion to remove the negative mark from your credit report.
A goodwill deletion is a request you send to your lender or creditor, typically in the form of a goodwill letter, asking them to forgive a past mistake and remove the late payment from your credit report as a gesture of goodwill. This strategy is most effective if:
The late payment was a one-time incident.
You’ve consistently paid on time before and after the slip-up.
You’ve had a long-standing, positive relationship with the creditor.
Lenders are not required to honor your request, but many will consider it, especially if you explain the reason behind the missed payment (e.g., a medical emergency or job loss) and express your ongoing commitment to staying current on payments.
Pro Tip: Be polite, honest, and specific in your goodwill letter. Keep it brief, professional, and emphasize your history of reliable payment behavior.
6. Avoid Pre-Approved Offers
You’ve probably received those tempting “pre-approved” credit card offers in the mail or online, promising low interest rates, cash back rewards, or bonus points.
While they can seem like great opportunities, applying for these offers can actually hurt your credit score in the short term.
When you accept a pre-approved offer, the lender performs a hard inquiry on your credit report to finalize the application. Each hard inquiry can lower your score by a few points and stays on your report for up to two years.
More importantly, too many inquiries in a short time period can raise red flags to other lenders, making you appear desperate for credit or financially unstable.
While a few hard inquiries won’t ruin your credit, applying for new accounts too frequently can chip away at your score and reduce your chances of approval for more important credit, like a car loan or mortgage, when you really need it.
Pro Tip: Opt out of pre-approved credit offers by visiting OptOutPrescreen.com to reduce temptation and protect your credit profile.
7. Don’t Open New Utility Accounts Unnecessarily
When you sign up for new utility services, like electricity, gas, water, or internet, the provider may run a hard credit inquiry to assess your financial reliability.
While this is common practice, it can result in a small but real drop in your credit score. If you’re moving to a new home or apartment, opening multiple new accounts at once can cause a cluster of hard inquiries, which may raise red flags to lenders.
One way to avoid this is by transferring your existing utility accounts to your new address instead of canceling and starting over. Most providers offer easy transfer services that allow you to keep the same account number and history, helping you avoid new credit checks and maintain continuity.
Even if you must open a new account, ask the provider whether they’ll perform a hard or soft inquiry. Some companies may waive the credit check if you pay a small deposit or provide proof of good standing with a previous provider.
Pro Tip: Before moving, contact your current utility companies and request account transfers whenever possible to protect your credit profile and avoid unnecessary dings.
8. Mind the Small Stuff, Even Library Fines
It might sound surprising, but even something as minor as an unpaid library fine can come back to haunt your credit.
If left unresolved for too long, small debts, including parking tickets, utility overages, medical co-pays, or yes, overdue library books, can be turned over to a collections agency.
Once a debt is sent to collections, it gets reported to the credit bureaus and becomes a major negative mark on your credit report. Collections accounts can stay on your credit file for up to seven years, even if the amount owed was just a few dollars.
These black marks can drag down your score and make it harder to qualify for loans, housing, or new credit.
That’s why it’s important to stay on top of every bill, no matter how small. Check your accounts regularly, library, utilities, memberships, etc., and resolve any outstanding balances immediately. A few dollars now can save you hundreds in lost credit opportunities later.
Pro Tip: Set reminders to review “non-credit” accounts like libraries, medical providers, and subscriptions at least once a quarter to ensure nothing slips through the cracks.
9. Avoid Too Many Online Quote Comparisons
Shopping around for the best deal on insurance, loans, or financing is smart, but it can unintentionally hurt your credit if you’re not careful.
Many websites and apps that offer quote comparisons for auto loans, personal loans, or insurance policies may perform hard credit inquiries when you submit your information, especially if you’re asked to “pre-qualify” or “get matched.”
While one or two hard inquiries won’t severely damage your credit, multiple hard pulls in a short period can lower your score and make you appear risky to lenders.
This is especially true when you’re actively shopping for different types of credit at once.
To protect your score, look for “soft pull” options. These allow you to check rates or pre-qualify for services without affecting your credit. Reputable lenders and platforms will clearly disclose whether a soft or hard inquiry will be performed, so always read the fine print before clicking submit.
Pro Tip: Use aggregator sites that clearly advertise soft pulls (like Credit Karma or NerdWallet) for rate comparisons, and limit how often you shop around within short windows of time.
10. Limit the Number of New Accounts
While it may be tempting to open new credit cards for a bonus offer or store discounts, each new account you open can temporarily hurt your credit. That’s because opening a new credit account:
Triggers a hard inquiry, which can lower your score by a few points.
Reduces your average account age, which negatively affects the “length of credit history” portion of your score.
Opening multiple accounts in a short period raises red flags for lenders. It can signal financial instability or suggest that you’re relying too heavily on credit to manage your expenses.
Even if you have a strong credit score, excessive applications can work against you when applying for important loans like a mortgage or auto loan.
Instead, be strategic about when and why you apply for new credit. Space out applications, prioritize quality over quantity, and focus on accounts that genuinely support your financial goals.
Pro Tip: Before opening a new account, ask yourself: “Will this help me build long-term credit health or is it just for short-term perks?”
11. Use a Secured Credit Card
If your credit is damaged or you’re just starting out, getting approved for a traditional credit card can be difficult. That’s where a secured credit card comes in, a safe and effective tool for building or rebuilding credit.
With a secured card, you make a refundable cash deposit upfront, usually between $200 and $500, which serves as your credit limit.
This deposit protects the lender in case you default, making secured cards much easier to qualify for than unsecured cards.
The key is to use the card just like a regular credit card: make small purchases, keep your balance low, and pay it off on time every month. These positive behaviors are reported to the credit bureaus, helping you establish or repair your credit history over time.
After several months of responsible use, many issuers will offer to upgrade you to an unsecured card and refund your deposit, marking a major step forward in your credit journey.
Pro Tip: Choose a secured card that reports to all three major credit bureaus (Experian, Equifax, and TransUnion) to ensure your progress is captured across your full credit profile.
12. Dispute Credit Report Errors
Credit reports aren’t always accurate, and even a small error can have a big impact on your score.
From duplicate accounts to incorrectly reported late payments or accounts that don’t belong to you at all, credit report errors are more common than most people realize.
These mistakes can unfairly drag down your score and hurt your chances of qualifying for credit.
That’s why it’s crucial to review your credit reports regularly. You can access all three of your credit reports for free once a year through AnnualCreditReport.com, the only site authorized by federal law.
If you spot an error, act fast:
- Gather documentation to support your claim (e.g., payment confirmations, account statements).
- File a dispute with each of the credit bureaus, Experian, Equifax, and TransUnion, through their online portals or by mail.
- The bureaus are required to investigate and respond within 30 days.
Fixing these mistakes can result in a quick boost to your credit score and eliminate inaccurate red flags from your profile.
Pro Tip: Set a calendar reminder to check your credit reports every 4 months by rotating through the three bureaus, this way, you stay on top of your credit year-round.
13. Negotiate With Creditors
If you’re going through a tough financial period and can’t make a payment, don’t wait until you’re behind, reach out to your creditors immediately.
Many people avoid contacting lenders out of fear or embarrassment, but proactive communication can actually protect your credit.
Creditors are often willing to work with you, especially if you’ve been a reliable customer. Depending on your situation, they may offer:
Temporary forbearance or deferment, allowing you to pause payments without penalty.
Lower interest rates to reduce your monthly burden.
Modified repayment plans that adjust your due dates or payment amounts.
By negotiating ahead of time, you can avoid missed payments, late fees, and the negative credit reporting that comes with them. This helps preserve your score while you get back on your feet.
Pro Tip: Always get any modified payment agreement in writing, and continue to monitor your credit report to ensure the creditor is reporting your account accurately.
14. Build Long-Term Relationships With Creditors
In the world of credit, consistency and longevity count. Lenders don’t just look at how much credit you have, they also consider how long you’ve managed your accounts.
That’s why building long-term relationships with your credit card companies, banks, and lenders can have a positive effect on your credit score and overall financial profile.
Maintaining the same credit accounts over time shows stability, reliability, and financial discipline. It increases the average age of your credit accounts, which is a factor in your credit score, and contributes to a positive payment history, which is the most important scoring factor.
Switching cards frequently for short-term benefits, like a sign-up bonus or a temporary 0% APR, might sound attractive, but it can backfire by lowering your average account age and increasing hard inquiries.
Instead, focus on managing a few key accounts well: pay them on time, keep balances low, and use them regularly to show healthy credit activity.
Pro Tip: If you want to switch to a card with better benefits, see if your existing bank offers a product upgrade. That way, you keep your account history intact while getting new perks.
15. Monitor Your Score Regularly
Knowledge is power, especially when it comes to your credit. Monitoring your credit score regularly helps you stay informed, spot potential issues early, and track your progress as you work to improve your financial health.
Fortunately, many credit card issuers now offer free access to your FICO® Score or VantageScore right in your online dashboard. These tools often include explanations for score changes and tips for improvement.
Additionally, free apps like Credit Karma, NerdWallet, and Experian allow you to monitor your score, review your credit report, and even get alerts for new activity or potential fraud.
Regular monitoring helps you:
Catch errors or unauthorized accounts early.
Understand how your actions (like paying off a loan or opening a new account) affect your score.
Stay motivated and informed as your score improves over time.
Pro Tip: Set a monthly reminder to check your score. Even a quick review can help you stay on track and ensure there are no surprises when you need to apply for credit.
Final Thoughts: Good Credit Is a Long-Term Game
You don’t need a perfect credit score to succeed, but a good one can open doors and save you serious money. Building credit takes time, but every smart step you take today creates a brighter, more stable financial future.
Whether you’re recovering from a credit mishap or just getting started, these 15 credit score strategies can guide you on the path to stronger finances and greater freedom.
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