The Top 40 Ways to Improve Your Credit Score

One of the first and most important tasks most everybody should tackle as an adult is establishing and improving their credit score. That’s because people with great credit enjoy lower loan rates that can result in serious monetary savings.

It’s no secret that mortgage rates can vary by 1.5 percentage points or more between the highest and lowest credit tier.

To put that in perspective, if you borrow $200,000 and get a 30-year mortgage at 5%, you’ll pay $176,011 in interest over the life of the loan. On the other hand, if you have to pay 6.5%, you’ll end up paying an additional $66,994 over the same time period.

So how can you improve your credit score? Well, I think I have more than a few ideas, both directly and indirectly. Here they are in no particular order:

  1. Get a credit card and establish a credit history.
  2. Better yet, get two credit cards. Then use them responsibly.
  3. If you have had problems in the past, reestablish your credit history ASAP.
  4. Understand how people of modest means have learned to stay out of debt.
  5. Never be late paying your mortgage.
  6. Don’t consolidate your credit card accounts.
  7. Resist the urge to cut up your old credit cards.
  8. Cut up your old credit cards, but don’t close the accounts.
  9. Raise your credit limit; many times the credit card company will do it if you just ask them.
  10. Emulate your next door millionaire neighbor.
  11. Take advantage of the power of payment reminders; consider automatic payments.
  12. Avoid bouncing checks.
  13. Don’t be a deadbeat.
  14. If you do bounce a check, pay it off before your debt is reported to a collection agency.
  15. If you can help it, never apply for bankruptcy.
  16. Don’t emulate your next door neighbor.
  17. Understand the difference between a want and a need.
  18. Don’t apply for a new credit card.
  19. Use your credit cards for everything you can, then pay them off in full before the statement date.
  20. Be patient.
  21. Develop a healthy disdain for paying interest.
  22. Get a copy of your credit report and go over it with a fine-toothed comb.
  23. If you find any inaccuracies on your credit report, vigorously dispute them.
  24. Don’t be greedy.
  25. Ensure your debt-to-income ratio stays as low as possible.
  26. Don’t open a lot of new credit accounts too quickly.
  27. Understand that the power of compound interest is a double-edged sword.
  28. If you have missed payments, pay them off and then keep them current for evermore.
  29. Motivate yourself by realizing that the odds of buying your own home without a loan are slim.
  30. Spread your debt out across multiple credit cards, rather than piling it all on one.
  31. Show lenders that you can be responsible with both revolving (credit cards) and installment (e.g., personal loans, etc.) credit.
  32. Stop spending more than you earn.
  33. Don’t request a lower credit limit.
  34. If you have a delinquent account, ask your creditor if they will reage your account.
  35. Understand that a collection account stays on your credit report for seven years — even if you pay it off.
  36. Pay your bills on time.
  37. Immediately challenge credit card companies that claim you’ve made a late payment.
  38. Never exceed your credit limit.
  39. Respect the power of credit cards.
  40. Build a long and sustained history of responsible borrowing.

Photo Credit: kevindooley


  1. 1

    Chupacabras says


    Could you clarify point 19 for me? I thought you wanted a statement balance that would show a 1-5% credit utilization on your credit reports, then payoff the balance between the statement date and the due date to avoid interest. Is this not the case?

    • 2

      Len Penzo says

      The theory behind number 19 is if you paid the card off before the statement date, then you would ensure a minimum credit utilization rate because you’d clear your purchases before they were officially reported.

      • 3

        Chupacabras says

        I was definitely wrong on this one. Here I was thinking you only got rewards dollars on the statement balance of a CC and not the actual spending, so was trying to keep a happy medium.

        Now that I know this (and verified it other places, of course) I’ll be pummeling my Discover Card most vigorously.

  2. 4


    Len, I like your advice about emulating how someone of modest means stays out of debt! Not only will that improve your credit score it will allow you to build real wealth. I teach a Personal Finance Course to Middle School Students and am always shocked at the lack of financial literacy skills of my students. Credit is one topic I cover and we go over several scenarios showing the total cost of financing with excellent, good, and bad credit scores. One issue we talk about in class is delayed gratification or the lack there of and the financial cost of financing things we want rather than waiting until we have the cash.

    Happy Holidays Len!

    • 5

      Len Penzo says

      Thanks, Paul. Classes like the one teach are sorely needed today. I think a personal finance management class should be required to earn a high school diploma.

      Merry Christmas to you!

  3. 6


    I’m currently using step 19 as a friend told me this was a good way to increase my credit score. I buy everything on my credit card for points and then just pay it off before it’s due.

    I didn’t realise there were so many other ways to increase my credit score!

    Thanks for sharing.

  4. 7

    Dani says


    Nearly 5 years ago, when I was 20 (and under my mom’s health insurance), the insurance apparently didn’t pay all of a medical bill and it ended up going to collection. I found out about this last year (I am now 25) and paid the amount. It was approximately $300. Since I have actually been actively managing my money and living on my own, I have had an excellent credit record – pay everything on time, have had one car loan and a credit card, and now have a home mortgage loan. Is there nothing I can do to remove the small collection amount from my credit report? It is so frustrating that I didn’t even know about the collection and that it is only a small amount but negatively affecting my credit score.

    • 8

      Len Penzo says

      Sadly, Dani, I don’t believe there is much you can do. The best advice I know of is to check the info about the collection account and check for any errors — no matter how insignificant. According to

      “If any of the information reported about the collection account to the credit reporting agencies is inaccurate or incomplete, you have the right to dispute that account with the credit reporting agencies. They must verify the information with the source. If the source doesn’t confirm the information within thirty days, the credit reporting agency must remove it. Some agencies will not bother to verify older paid collection accounts.”

      More good news … time is your friend. Over time, the impact of the negative report on your credit score diminishes. So even though it may stay on your record for seven years, it is less of an impact in year two than year one — and even less in year three than year two.

      Hope that helps.


Leave a Reply

Your email address will not be published. Required fields are marked *