Your credit score follows you around for your entire adult life. It’s there when you take out a student loan and get your first bank account, it’s there when you buy your first car and get your first credit card, and it’s there when you decide to take your first step on the property ladder.

A good credit score can make your life considerably easier. It can give you more negotiating power, lower interest rates and more financing options, not to mention very few setbacks. A bad credit score, however, can render you financially incapacitated. It can feel like you’re stuck in a Catch-22, unable to improve your credit score until you have money and unable to get money because of your poor credit score.

But there are ways to repair credit and improve your credit score without leaving yourself short after every single paycheck. These top tips will show you how to improve your credit score and how to repair bad credit.

1. Understand Your Score

Repair Bad Credit

It may seem like we’re stating the obvious with this first one, but you would be surprised at how many Americans fail to understand the credit score system and suffer as a result. According to a MoneyTips survey conducted in 2017, 30% of Americans do not know their credit score, including more than half of all people under the age of 30.

There is a certain sense of invulnerability that accompanies youth and because they are young and often not responsible for houses, cars or big paychecks, they just don’t believe that it concerns them. But by learning to keep track of your credit score from a young age you can avoid falling into financial pitfalls when you are older.

Look at it this way, the average student takes nearly $40,000 in student loans. And when you add car loans, credit cards and other debts on top, most Americans are in over their heads before they reach 30, yet they don’t start worrying about this until they get into their 40s. By acting sooner and being more financially responsible when you’re young you can avoid serious financial difficultly as you age.

2. Focus on Credit Cards

Improve Credit Score

One of the biggest deciding factors in your credit score is your total credit card debt. Not all debt is treated equally. If you’re going to improve a bad credit score you need to understand where those numbers are coming from.

Nearly a third of your score is all down to credit card debt and the “sweet-spot” for this debt is no more than 30% of your total credit limit. There are two mistakes that many Americans make where credit cards and credit scores are concerned.

  1. They use credit cards to pay off other debts. This will just send credit card debt sky-high in order to save something that may have less of an impact on your score.
  2. They assume that their credit score only calculates the debt if they don’t pay it off every month. In actual fact, every penny of credit you use will go down as debt initially.

So, limit your credit card spending altogether and try to pay off as much debt as you can every month.

3. Mix It Up

Credit Tips

You could be forgiven for thinking that fewer lines of credit would result in a better credit score. But the more accounts you have the better your score will be, because 10% is calculated on variety. This means that an account with a mortgage, a car loan and a credit card will score higher in this area than one with three credit cards.

So rather than taking out additional credit cards in order to buy gifts, cars, computers and other expensive items, consider car loans and financial agreements instead.

4. Keep a Close Eye on Your Credit Score

Fix Credit Score

Derogatory marks can show up on your score from time to time. They may be the result of a mistake from the lender, they may be a genuine error on your part. In any case, you can dispute them and ask for them to be removed. Tell your story and they may take pity. If it’s an actual error that isn’t your fault, they are required to investigate and remove.

Your credit score can also be negatively affected by fraud. If you have your ID stolen then the numbers you worked so hard to increase will plummet. More than 15 million Americans are hit by some form of ID theft every year, but by keeping an eye on your score you can stop issues like this before they get out of hand.

5. Get Some Credit

The only way to improve your credit score is to take out credit. If you have never taken out any credit accounts then you will have a low score, much lower than someone who has multiple accounts and lots of debt but meets repayments every month. Lenders need to know that they can trust you. If you have nothing for them to base this trust on, then they won’t give you high lines of credit.

A small minority of Americans live credit free when they are younger—either because they have a high-paying job or they are living off their parents—and are then surprised when they fail to get a mortgage or car loan. A large line of credit like this needs an experienced lender.

So take out a credit card and use it. It doesn’t matter if you only use it for small purchases. If you meet the repayments every month, your score will improve significantly and your potential credit will increase.

6. Get Help

How to Repair Credit Scores

You may have noticed that none of these credit repair tips include things like, “Don’t spend more than you can afford to” and “Don’t take out high interest loans”. We’re going to take a leap of faith and assume you already know these things. Financial experts often give advice like that because they don’t understand how easy it is to acquire substantial debt. They assume that people take out these loans because they don’t understand them, not because they have no other choice.

We know it's difficult so we’re not going to patronize you by telling you things you already know. What we will say, however, is that you need to lose the “all or nothing” attitude that many debtors have. You need to think about the bigger picture instead of the “right now”, and get help when it's being offered.

That help can come from friends and family or it can come from debt management agencies. If you can’t afford to feed your family and are slipping deeper into debt, these people will help. If you have a gambling addiction, drug addiction or a serious financial issue, there are organizations that can help as well.

Take a look at the menus at the top of this site to browse through the many consolidation and debt relief companies we have reviewed. They can offer advice and direct intervention with regards to credit repair and improved credit scores. You just need to admit that help is needed and they can provide it.