8 Ways to Fix a 'Bad' Credit Score (2024)

In 2022, US consumers had an average of $5,910 in credit card debt, and every generation saw an increase in the use of their available credit.

Credit card debt, and therefore having a high credit utilization ratio, will reflect poorly on your credit scores.

It can happen to anyone. Maybe you got in over your head with credit cards. Or you couldn’t pay your bills during a crisis. Or maybe someone stole your identity. Whatever the case, you’re now facing the challenge of fixing a “bad” credit score.

If your credit score is lower than you’d like, it’s possible to rebuild your credit and improve your score. We’ll explain how

Why is my credit score important?

A low credit score is more than just a number -- it can have a huge impact on your life.

You could have a hard time getting approved to rent an apartment. It could keep you from getting the best rates on loans and credit cards, leading you to pay higher interest rates -- or get rejected altogether. In some instances, a below-average credit score can even affect your job prospects.

How your credit score is calculated

Before you can repair your credit, it’s important to understand how your credit score is calculated. And that starts with your credit reports.

Credit reports contain information on your payment history and status for your credit accounts, including credit cards, car loans and student loans. This data is reported to the three major consumer credit bureaus: Equifax, Experian and TransUnion.

You might have different results with each because not all lenders and creditors report to all bureaus, and they don’t always report at the same time each month. All three reports should look similar, though.

Companies use formulas -- called scoring models -- to create your credit score based on the information in your credit reports. Just as you have more than one credit report, you have more than one credit score, depending on which scoring model the company uses.

For the purpose of this article, we’ll be referring to your FICO score -- one of the most popular credit scoring models -- which is divided into five categories:

  • 35% payment history: Your past pattern of payments (on-time or late -- and how late) can raise or lower your credit score.
  • 30% amount owed: The balance you carry on all accounts compared to the amount of credit available to you is your credit utilization ratio. Your credit score will improve as this percentage decreases.
  • 15% length of credit history: The longer you’ve owned a credit account, the more it can help your credit score.
  • 10% new credit: When you apply for new credit, the card provider will likely pull your credit (also known as a hard inquiry). Inquiries can remain on your credit report for two years, but FICO only counts inquiries from the last 12 months.
  • 10% credit mix: This is the variety of credit you hold (installment loans, credit cards, mortgages, etc). Lenders may consider you less risky of a borrower if you can manage multiple types of credit.

Your credit score is continuously updated as your credit profile changes. FICO scores generally range between 300 and 850. Credit scores under 580 are considered “poor” and those between 580 and 669 are considered “fair.”

8 steps for fixing your credit score

1. Check your credit report and score

If you want to increase a low credit score, the first step is to look at your credit report and review it for accuracy.

You can access free weekly online credit reports from the three bureaus by going to AnnualCreditReport.com. It’s important to get your credit report from all three credit reporting agencies.

Checking your own credit score is a soft hit on your credit and will not impact your score. You can typically see the score for free if you have an account with a bank, credit card company or other lender. You can also get your score by meeting with a nonprofit credit counselor.

2. Dispute any errors

If you find an error on any of your credit reports, dispute the error right away. You may need to provide documentation indicating what information is incorrect (such as confirmation that you paid your bills on time if they were reported as late).

The credit bureau typically has 30 days to complete its investigation, according to the Fair Credit Reporting Act.

Depending on the error, a resolution could improve your credit score quickly. However, there is still more work to do to boost your score.

3. Get bill payments under control

The biggest impact on your credit score is your payment history, which accounts for 35% of your score. If you want to improve your credit score, paying your bills on time will help. One way to stay on top of your payment due dates is to set up automatic payments for your existing accounts. This way, you don’t have to remember to make a payment every month.

While we always recommend paying off your full balance, if you can’t afford it, paying the minimum amount due can help you avoid late fees and even higher interest fees. Paying the minimum will also slowly chip away at your balance, which will improve your score over time.

4. Set a goal for less than a 30% credit utilization ratio

Your credit utilization ratio is calculated by dividing your total debt owed by your total available credit.

So, if you have a $3,000 credit limit and a credit card balance of $800, your credit utilization rate would be 26.67% ($800 divided by $3,000).

In general, the higher your utilization ratio, the lower your credit score. While your payment history is the most important factor in calculating your FICO credit score, your credit utilization ratio is the second most important.

If your credit utilization ratio is 30% or higher, set a goal to get it lower than 30%, with 10% or less being the ultimate goal. Paying off your outstanding balances quickly and avoiding taking on more credit card debt can help you reach your goal faster. You can also ask to raise your credit limit, though this tactic may not work if you’re still using your credit card for purchases.

If you have a significant amount of outstanding credit card debt, you may be able to consolidate the debt to make payments more manageable and pay it off faster. A debt consolidation loan can offer lower interest rates to help you save as you pay off the debt.

5. Limit new credit inquiries

Anytime you apply for credit or ask for a credit limit increase, an inquiry is made on your credit. There are two types of inquiries -- a soft inquiry and a hard inquiry.

A soft inquiry does not affect your credit score and occurs when:

  • You check your own credit score.
  • You give permission to an employer to check your credit.
  • Credit card companies check to see if you’re preapproved for offers.
  • Financial institutions you do business with check your credit.

A hard inquiry happens when you apply for new credit, and it can hurt your credit score. While one hard inquiry may only have a temporary effect, multiple inquiries in a short time frame can damage your credit score and lead lenders to assess you as a risky borrower.

6. Avoid closing old credit cards

If you’ve paid off a credit card and don’t plan to use it, you may think that closing the account is the right move. Actually, closing old credit cards can lower your credit score even more. Credit history length accounts for 15% of your credit score, and the longer your credit history, the better.

Instead, hide the old cards in some place safe so you can’t easily use them. If you can handle the card responsibly, consider putting one recurring expense on the card each month -- like a Netflix subscription -- then pay it off in full and on time.

Otherwise, the issuer may close the account due to inactivity. If your credit card has an annual fee, it may be a good idea to close the account if you don’t plan to use it again.

7. Consider a balance transfer card

If you’re swimming in credit card interest, one possible solution is moving your balances to a low- or no-interest balance transfer credit card.

Balance transfer credit cards typically offer an introductory 0% APR for nine to 21 months. This lets you consolidate high-interest credit card debt onto one card, combining your payments and saving you in interest.

Before applying for a balance transfer card, make sure you can afford to repay your debt within the introductory period -- otherwise, you may find yourself right back where you started.

To figure out how much you’ll have to allocate toward the balance each month to pay it down in time, divide the balance by the number of months in the promotional period. Just remember to include the balance transfer fee, too, which is typically 3% to 5% of the transferred balance.

The balance transfer fee is added to the transferred balance, rather than having to pay it upfront. While paying an additional fee is groan-inducing, it’s usually far better than leaving a large credit card balance on a card with a high APR.

8. Apply for a secured credit card

Rebuilding your credit can take time, but if you don’t qualify for a traditional credit card, you can improve a bad credit score with a secured credit card.

A secured credit card works just like a regular credit card, but your credit limit is typically based on a refundable security deposit. For instance, if you put down a $500 security deposit, your secured credit card limit will likely be $500.

With good payment history and credit usage, your credit limit may increase and you can get your deposit back. You may even have the opportunity to upgrade your card to a traditional credit card.

FAQs

This depends on how your credit was affected and the seriousness of your credit issues. If you’ve only had a few recent mistakes, you may be able to fix your credit in a few months, but if you’ve had a long history of missed payments and poor credit management, it could take years to see serious improvements.

There are some legitimate credit repair companies that can help you dispute errors on your credit report. However, there’s nothing these companies can do that you can’t handle on your own through the credit bureau dispute process. If you do choose to use a credit repair service, be cautious of any company that doesn’t explain your rights as a consumer. Also, if a company asks you to pay upfront or promises to remove negative marks on your credit report that are accurate, it may be a credit repair scam.

Closing a credit card with poor payment history will not increase your score, and it could actually lower your score temporarily. When you close a credit card, it lowers your available credit and increases your credit utilization ratio. If it was one of your first cards, it could also lower your average credit history. All of these factors could damage your credit score.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

8 Ways to Fix a 'Bad' Credit Score (2024)

FAQs

8 Ways to Fix a 'Bad' Credit Score? ›

It's not possible to wipe your credit history clean. Negative items like late payments, collections and bankruptcies typically remain on your credit report for several years. However, you can rebuild your credit with on-time payments, debt reduction and responsible credit account management.

How can you fix a bad credit score? ›

Here are seven steps you can take to begin improving your credit score.
  1. Check Your Credit Score And Credit Report. ...
  2. Fix or Dispute Any Errors. ...
  3. Always Pay Your Bills On Time. ...
  4. Keep Your Credit Utilization Ratio Below 30% ...
  5. Pay Down Other Debts. ...
  6. Keep Old Credit Cards Open. ...
  7. Don't Take Out Credit Unless You Need It.
Feb 8, 2024

How to wipe your credit history clean? ›

It's not possible to wipe your credit history clean. Negative items like late payments, collections and bankruptcies typically remain on your credit report for several years. However, you can rebuild your credit with on-time payments, debt reduction and responsible credit account management.

How to boost FICO score fast? ›

Reduce the amount of debt you owe
  1. Keep balances low on credit cards and other revolving credit: high outstanding debt can negatively affect a credit score.
  2. Pay off debt rather than moving it around: the most effective way to improve your credit scores in this area is by paying down your revolving (credit card) debt.

How can I raise my credit score 100 points overnight? ›

10 Ways to Boost Your Credit Score
  1. Review Your Credit Report. ...
  2. Pay Your Bills on Time. ...
  3. Ask for Late Payment Forgiveness. ...
  4. Keep Credit Card Balances Low. ...
  5. Keep Old Credit Cards Active. ...
  6. Become an Authorized User. ...
  7. Consider a Credit Builder Loan. ...
  8. Take Out a Secured Credit Card.

How do I clear my bad credit score? ›

Clearing your credit score
  1. Pay off your accounts.
  2. Pay bills on time.
  3. Check for court orders.
  4. Check for errors.
  5. Don't apply for more than one loan at a time.
  6. Avoid spending up to your credit limit.

How long can it take to fix a bad credit score? ›

How long does it take for your credit score to go up?
EventAverage credit score recovery time
Bankruptcy6+ years
Home foreclosure3 years
Missed/defaulted payment18 months
Late mortgage payment (30 to 90 days)9 months
3 more rows
Jul 27, 2023

Can you legally erase bad credit? ›

No, you cannot remove accurate information from your credit report. The bureaus are required to include all accurate information. While it's unlikely, you can ask the creditor to remove the negative item from your report.

What is a 609 letter to remove late payments? ›

Section 609 gives consumers the right to request information related to debts listed on their credit reports. Examples of information that you may want to dispute include: Accounts opened due to identity theft. Late payments that were paid on time.

How do I remove red flags from my credit report? ›

The primary route to flag removal is by completing the debt review process and acquiring a clearance certificate from your debt counsellor or debt review removal expert like Clear Me Now. This certificate serves as proof that you've effectively managed your debts and are no longer considered over-indebted.

Can I pay someone to fix my credit? ›

You can always try to repair your credit yourself; however, depending on your financial situation, working with a reputable credit repair service may save you time and provide a better outcome in the long run.

What is TomoBoost? ›

What is TomoBoost? TomoBoost is a product we developed to help increase credit scores FAST. We also enhance this process through analyzing successful recurring payments. I don't see rent showing up. Our rent identification system is now out!

What boosts credit scores the most? ›

1. Make On-Time Payments

Payment history includes on-time, late and missed payments, all of which are reported to one or more of the national consumer credit bureaus (Experian, TransUnion and Equifax). Always making payments on time can go the furthest to helping you improve credit.

What credit score is needed to buy a house? ›

A good credit score to buy a house is one that helps you secure the best mortgage rate and loan terms for the mortgage you're applying for. You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500.

Can you recover from a bad credit score? ›

This depends on how your credit was affected and the seriousness of your credit issues. If you've only had a few recent mistakes, you may be able to fix your credit in a few months, but if you've had a long history of missed payments and poor credit management, it could take years to see serious improvements.

How fast can you fix a 500 credit score? ›

For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.

Can bad credit go away? ›

In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.

What happens if my credit score is really bad? ›

You'll get fewer credit card options and higher interest rates. Bad credit can make a real impact when shopping for a new credit card. You can find many credit cards or those with poor credit, but they won't offer as many perks or benefits as cards available to those with higher credit scores.

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