Key takeaways

  1. Poor payment history, debt size, credit utilization, and public records all affect your credit score
  2. Good scores are vital as they indicate trustworthiness to lenders, and often provide access to better services and job opportunities
  3. To improve your score, review your credit reports for accuracy, pay down existing debt and make on-time payments, increase available credit limits, and reduce the number of new credit inquiries 
  4. Credit monitoring services can help you identify weak spots in your financials and provide guidance for improvements
  5. Rebuilding credit is a process that takes time and dedication; close attention must be paid to improve your creditworthiness 

Bad credit scores linger like the voices in the back of our heads. As much as you try to ignore them, they don’t go away until you address them. We understand how difficult it can be, but there is a light at the end of the tunnel. 

Rebuilding credit takes time and dedication, but with some patience and a sound strategy in place, you can improve certain elements that are dragging your score down.

Here are some steps you can start taking today to improve your score and unlock new opportunities. 

What factors affect my credit score?

There may be several factors influencing your credit—some you might not even know about. Let’s review a few of the more common ones the credit bureaus watch like a hawk. 

  • Poor payment history: The credit bureaus are constantly monitoring the timeliness of your payments. On-time payments can do well to raise your score; late payments will cause it to fall.
  • Debt size: In most cases, the more debt you have, the less desirable you are to a potential lender. Common types of debt include different types of loans, collections, and the most popular type of debt: credit card accounts.
  • Credit utilization: The major credit bureaus employ a credit utilization ratio that compares how much available credit you have (total credit limit) against the amount you are using at any given time (more on this later).
  • Lifespan of accounts: Generally, the longer you keep a credit account active, the better your score will be.
  • Account diversity: Credit bureaus like to see that you have a solid credit mix, which shows you are using more than just one or two types of credit accounts. It shows your ability to manage multiple types of revolving accounts.
  • Public records: Major events like civil judgments or bankruptcies can have a significantly poor effect on your score.
  • Hard inquiries: Every time you apply for a new line of credit, the lender will usually perform what’s called a hard inquiry. Too many in a short period of time may lead to your score suffering. 

What items in my credit report affect my score the most (with percentages)? 

According to Experian—one of the major consumer credit reporting companies in the US—payment history is the most critical factor that influences your FICO score (generally the most widely-used score by lenders).

Here’s a list of the least to most impactful credit score items with percentages.

  1. 10% - New inquiries (when you apply for a new credit card or loan)
  2. 10% - Credit mix
  3. 15% - Credit history length
  4. 30% - Total amount owed
  5. 35% - Payment history

Why do good credit scores matter anyway?

Credit scores assess your ability to be a responsible borrower. They indicate how trustworthy you are to a lender. When a lender takes a look at your credit score provided by a credit bureau, they are essentially asking themselves whether or not you can be trusted with their money.

A good credit score is vital for many reasons. The higher your score, the better interest rates and terms you’ll have access to when applying for a loan or line of credit. 

A good score can also give you access to higher-end services like premium rewards credit cards, rental applications, and even job opportunities. The goal is to boost your score as high as possible (the highest score is 850).

How to rebuild credit: 8 tips

1. Check your credit reports for accuracy

A low credit score may not be entirely your fault. To find out if all of the information on your reports is 100% accurate, request copies from the three major credit bureaus (Transunion, Experian, and Equifax) for free at These reports will show you what is hurting (or helping) your score.

Factors that float credit scores:
  • Low credit card balances
  • A solid history of on-time payments
  • Diverse credit mix 
  • Credit accounts active for long periods
  • Low number of new credit inquiries
Factors that sink credit scores: 
  • High credit card balances
  • A history of late or missed payments
  • A thin credit file (little credit history)
  • Collections accounts
  • Judgments

What are the fastest ways to increase my credit score?

Boosting your score takes time, but there are a few things you can do today to move the needle:

  • Pay down existing debt: The less debt you have, the more attractive you are to lenders. 
  • Make on-time payments: Late payments can substantially negatively impact your score and will linger for years. Stay vigilant with due dates and keep your payment history clean. 
  • Increase credit limits: This lowers your credit utilization ratio—the amount of available credit you are using at a given time. A lower ratio can often lead to an improved score.
  • Monitor your credit: The only way to know if you’re successfully improving your score is to keep up with it periodically and make adjustments where necessary. 

2. Dedicate yourself to making on-time payments

As noted earlier, payment history impacts credit scores the most. So, it’s better to have debt that you already paid off (like old student loans) stay on your record. On-time debt payments work to your advantage.

If you have a history of missed payments, it probably comes down to a lack of organization. Here are some tips that may help:

  • Set up an alert system - every major credit card company has bill pay reminders that will notify you before it’s time to pay 
  • Set up automatic bank drafts - make sure the payment amount covers at least your minimum payment

3. Keep new requests low

Credit history inquiries come in two forms: soft and hard. 

An example of a soft inquiry is when you run a routine credit check (on your own credit). This type of inquiry does not impact your credit score. 

In contrast, hard inquiries stem from new credit applications. These can lower your score for a few months to two years. 

Multiple hard inquiries in a short span may signal financial distress to banks, potentially harming your score. If you are aiming to boost your credit, refrain from new credit applications for some time.

4. Don’t cancel old accounts

“Credit age” is the average amount of time you’ve had credit accounts open. For this reason, it only makes sense to keep old accounts open even if you aren’t using them.

While the credit history for those accounts will still be recorded on your credit report, closing credit cards when you have an outstanding balance on other cards can reduce your available credit and raise your credit utilization ratio. That could potentially deduct a few points from your score.

5. Get a handle on your weak areas

If you have any unresolved collection or delinquent accounts or charge-offs, don’t ignore them; they’re not going to magically disappear. You must take care of these to improve your score. 

For instance, if you have an account with multiple missed or late payments, it’s crucial to first catch up on any outstanding amounts. Then, devise a plan to ensure timely payments in the future. That won’t eliminate your late payments, but can improve your payment history down the line.

If you have charge-offs or collections, consider paying them off or offering a settlement. Newer credit-scoring models assign less negative impact to paid collections.

Paying off collections or charge-offs may slightly boost your score. Remember that negative account information can stay on your credit history for up to seven years and bankruptcies for ten years.

6. Become an authorized user

One of the fastest ways to increase your credit score is to become an authorized user on a family member’s or friend’s credit card. Just make sure you are added to an account that has been in good standing for several years and has low utilization (30% or less). 

You don’t need access to the actual line of credit; you only have to be listed as an authorized user. As soon as you are added, your credit history will reflect that change.

7. Think about debt consolidation 

Taking out a debt consolidation loan may be advantageous if you have several outstanding debts. This strategy allows you to pay them all off at once and only deal with one payment going forward. Bonus points if you can lower your interest rate on the new loan and pay down your debt sooner. This move can better your credit utilization ratio and score.

Another move you can make is to consolidate your credit card balances via a balance transfer credit card. This method allows you to pay multiple balances off at once. You can often find a card with a 0% APR on the amount you transfer for a designated time (typically a year). 

8. Sign up for credit monitoring services

Credit monitoring services are great for keeping up with your credit score. Some popular sites include Credit Karma, Experian, and Equifax. 

These services track any changes in your credit reports, alert you to suspicious activity on your accounts, and provide tips for improving scores. Many also offer free educational tools such as access to a financial coach, credit simulations, and budgeting guidance. 

Credit monitoring can help you identify weak spots in your finances and give you the tools to improve them quickly. 

Final word

Rebuilding credit is a process that takes time and dedication. Making small changes over time can be the difference in improving or worsening creditworthiness. By committing to improving your credit, you can make a big difference in the future success of your financial goals.