(Last Updated On: November 11, 2019)

Having a bad credit score can impact other areas of your life besides getting a mortgage or a credit card.  It can affect your insurance rates and your chances for employment.

  If your credit could use a boost, here are some ways to do it.

Before You Start

Before we get started, there are a few pieces of informationyou should have in front of you. First,you should understand what constitutes good credit, which is having a goodcredit score, leading to the question, how is a credit score calculated? Acredit score is calculated based on 5 factors:

  • Your payment history – 35% of your score
  • Your credit utilization (amount you owe vs. yourcredit limit) – 30% of your score
  • Length of credit history – 15%
  • New Credit – 10%
  • Types of credit used – 10%

Second, we need to have current, accurate information on thecurrent status of your credit. To getyour credit picture, you need your credit report and your credit score. To get your credit report, goto annualcreditreport.com. To getyour credit score, there are a number of different ways to get them, free andpaid. Hereis a complete list of the free ways to get your score.

A good credit score is anything above 720 (credit scoreranges are from 350 to 850, with 850 being the best score). However, once you get to 680, many creditproducts will become available to you, so if your credit score is low, aimingfor 680 is a good short-term credit goal.

Bad Credit Fixing Strategies

1. Dispute inaccurate information on your credit reports. Since your payment history is the biggest chunk of your score, the first thing to do is to make sure that bad credit history is accurate. Review your credit report by looking at the Adverse History, Collections, and Public Records sections. These sections will list any negative credit history entries. Make sure that all the credit information, including the date, the amounts and the payment history, is correct.

If you find errors, even slightones, write a dispute letterto correct the listings. Do not disputeover the phone or online. Most peoplefind success with this method, as usually 10% of listings in a credit dispute letterget removed on the first try. Once youget the results of the dispute back, check your credit score again to see whatkind of progress you have made. If youfeel you need to redispute the information, make sure the disputed informationin the listing is different, or supply information why the initial dispute wascorrect.

Sometimes even disputing the minor bits of information about an account can result in having the listing removed from your credit report, which can really boost your score.  Also, when correcting information on your credit report, make sure that your name, address, social security number and employment history is correct, as this can prevent credit merging.  Credit merging occurs when information from someone who has a similar name or address winds up on your credit report.

2. Pay down credit card balances. Since this is the second biggest factor in determining your credit score, this is a highly effective way of getting a credit score boost. First of all, figure out your credit utilization rate for each credit card. It’s not that difficult: look at your credit report and divide your balance by the total credit line. If you are over 30% on any one or all of your cards, work on paying down those balances to no more than 30%. This will have an immediate effect on your credit score and this method will work the fastest to improve your credit. For the biggest improvement in score, try and get your credit utilization rate to 10%, which is the optimal amount.

3. Open a secured credit card account.  This method hits both the payment history scoring bucket of your credit score along with the new credit credit scoring bucket:  you will open a new account and you will promise to keep the payment history on this new card as perfect as possible (don’t bother getting the card if you can’t do this).  There are a number of credit card products on the market that cater to the less-than-stellar credit population.  Some of them have competitive interest rates and low to no annual fees. 

A secured card is obtained byplacing a deposit with a bank into a savings account or just having the bankhold it as a security deposit. A creditcard is issued with a total credit limit equal to the security deposit orsavings account. If the credit cardholder defaults on the card, the security deposit or money in the savingsaccount is forfeited. This greatlydecreases the risk to the bank and therefore a person with bad credit canqualify for one of these cards.

When getting a secured card, pay attentionto the fees, the amount of security deposit and the credit card interestrate. Also, try to get one that willallow you to migrate to over to an unsecured credit card program once you proveyour credit worthiness.

4. Get added as an authorized user or open anew account jointly with someone who has good credit. Doing this obviously requires a lot trust fromyour proposed credit card partner. Ifyou get added to an account or sign up for a joint one, the other person on theaccount will have responsibility for any charges that you make on thecards. However, the results of asuccessful partnership will be an improved credit rating for you, andpotentially the co-signor.

If you get added as an authorizeduser, make sure it is to an account with a low balance (you don’t want a highcredit utilization rate) and a good payment history. Being added to an established account willadd age to your accounts (10% of your score) and a positive payment history(35% of your score).

If you open a new account withsomeone, you are hitting the new credit credit scoring bucket, and also thecredit utilization rate, as most new cards start with a credit limit of $2500or more. Keep that balance low and youwill see your overall credit utilization rates lower to improve yourscore. Obviously, you will also want tomake sure to pay this new account on time, so as to not hurt your co-signor’scredit rating and your own. Byestablishing this new account, your perfect payment history will start topositively affect your credit in about 6 months to one year.


There is really no quick fix to fixing your credit, this isa long-term project, taking 6 months to a year. Time heals all credit wounds, even the most severe, as long as you makethe commitment to keeping your payment history clean and your credit cardbalances low.

For the complete guide to fixing your credit, review our credit repair guide.