6 Ways To Build Up a Low Credit Score in 2024
Written by
Laura Bogart
Edited by
Rebekah Evans
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There’s a lot of social stigma around having low credit, a presumption that someone with a score that could prohibit them from achieving core goals involving their personal finances — like buying a car or even renting an apartment must be bad with money. The truth is, it’s easier to get a low score than you might think: One accident, illness or job loss can put a dent in your ability to pay bills on time. Or you might find yourself prioritizing between rent and paying student loans.
Unfortunately, social attitudes around credit make it seem as if once your score dips into the lower zone, you’re stuck there for life. The good news is that, even if poor luck has cratered your credit score, with some hard work and careful planning, you can rebound.
Also see if a low credit score can cost you a job.
Pull Your Credit Reports
If the journey of a thousand miles starts with a single step, then the first step in your journey toward better credit is knowing exactly where you stand. Though learning what your credit score is can feel daunting, it will also give you the foundation you need to help climb out of the hole.
According to Debt.org, one of the first crucial steps toward improving your credit score is pulling credit reports from one of the three credit bureaus, Experian, TransUnion and Equifax, to get a free credit report. Not only will this help you understand your current score, it’ll also clue you into your credit activity and areas you need to improve, while letting you monitor fraud.
Dispute the Errors
After you’ve reviewed your credit report top to bottom, you might find that a bill you can prove you’ve paid on time has been erroneously listed as late. CNET Money reports that errors such as ex-spouses listed on current accounts, addresses you don’t recognize or incorrect balances can occur.
If you spot any of these errors, it’s essential that you snap into action and dispute them with the credit bureau. You can start by gathering all documentation and evidence proving the mistakes. Filing a dispute with an agency like Experian, TransUnion and Equifax is free.
Pay Debts on Time
Though the idea that filing a report about one mistake could single-handedly save your credit is appealing, repairing credit is a slow process. As Thomas Brock, chartered financial analyst (CFA), certified public accountant (CPA) and expert contributor for Annuity.org, said, you must prioritize making all debt payments on time.
“A well-established history of making payments on time can substantially boost your credit score,” he said.
Minimize Your Credit Utilization Ratio
Credit utilization ratio sounds like a convoluted term, but it really has a simple premise: It’s the amount of available credit you use at any time. Brock has clear advice for you about your credit utilization ratio: “Strive to never borrow more than 30% of your credit limit on any credit card or revolving line of credit.”
Limit Credit Inquiries
One of the most important things you can do to help boost your credit is one of the simplest.
“Do not apply for too many new credit opportunities,” Brock said. “Each application typically entails a hard credit inquiry, which will hurt your credit score.”
Maintain a Diverse Mix of Credit
If you’re already managing a variety of debts, Brock said that you can show creditors that you’re well positioned to satisfy your obligation. However, he advised that you don’t take on additional lines of credit solely to prove that you can manage them well.
“That said, opening new credit accounts to create diversity is not recommended,” he said. “Never take out new debt, unless you can comfortably manage it.”
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