Ways to Improve and Rebuild Your Credit

What is a credit score?¹

A credit score is a number — typically between 300-850 — that estimates how likely you are to repay a loan and make the payments on time. Credit scoring systems calculate your credit score in different ways, but the scoring system most lenders use is the FICO score. 

Note: Your credit score may vary depending on where you apply and how the score is calculated. The two most popular scoring models used in the United States are FICO^® and VantageScore^®.

Pay your bills on time, every time
“On time” means the payment gets to the company by the day the bill is due. If you pay by mail, put your payment in the mail a few days before it is due.

Don’t get too close to your credit limit 
Credit scores consider how close you are to being “maxed out” on credit cards. If you use too much of your credit limit, it may hurt your credit score. Some experts advise using no more than 30 percent of your total credit limit – while others say you should use less than 10 percent.

Don’t apply for too much credit in a short time
Your credit score may go down if you apply for or open a lot of new accounts in a short time. This includes getting a new card so you can transfer balances, or opening a new store card account so you can get a discount.

If you do not qualify for a regular credit card, try a secured card
Many banks and credit unions offer secured credit cards. With most of these cards, your credit line starts out small. You put an amount equal to your credit limit in an account as a deposit. As you show you can pay on time, your credit limit may be raised and you may have your deposit refunded. Fees and interest rates can be high for secured cards, but using one can help you to establish a credit record.

If you pay with a credit card, pay your balance off every month
You can build credit by using your credit card and paying on time, every time. Pay off your balances in full each month to avoid paying finance charges. Paying off your balance each month can also build better credit than carrying a balance, because it helps keep you from getting too close to your credit limit.

Keep it up
Credit scores are based on your overall experience with paying your bills over time. The longer you have credit and pay on time, the more information there is to show you’re a good credit risk.

Check your credit reports and fix errors right away
Your credit report shows your history of loans and borrowing. You can get a free printed copy of each of your credit reports from the three nationwide credit reporting companies every 12 months at annualcreditreport.com. When you visit the site, you may see steps to view more frequently updated reports online. This gives you a greater ability to monitor changes in your credit. You may find incorrect information that is bringing your score down. If you do, file a dispute with the credit reporting company and with the company that was the source of the information.