How to repair your credit and improve your FICO^® Score

You can improve your FICO Scores by fixing errors in your credit history (if errors exist) and then following these guidelines to maintain a consistent and good credit history. Repairing bad credit or building credit for the first time takes patience and discipline. There is no quick way to fix a credit score. In fact, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast.

The best advice for rebuilding credit is to manage it responsibly over time. If you haven't done that, then you'll need to repair your credit history before you see your credit score improve. The following steps will help you with that.

Steps to improve your FICO Score

1. Check your credit report for errors

   Carefully review your credit report from all three credit reporting agencies for any incorrect information. Dispute inaccurate or missing information by contacting the credit reporting agency and your lender. Read more about disputing errors on your credit report.

   Remember: checking your own credit report or FICO® Score has no impact on your credit score.

2. Pay bills on time

   Making timely payments to your lenders and creditors is one of the most significant contributing factors to your credit scores—making up 35% of a FICO Score's calculation. Past problems like missed or late payments are not easily fixed.

   • Pay your bills on time: Delinquent payments can significantly impact your FICO Score, even if only reported as 30 days past due. Use payment reminders through your banks' online portals if they offer the option. Consider enrolling in automatic payments through your credit card and loan providers to have payments automatically drafted from your bank account.

   • If you have missed payments, get current and stay current: Poor credit performance won't haunt you forever. The longer you pay your bills on time after being late, the more your FICO Score should increase. The impact of past credit problems on your FICO Score fades as time passes and as recent good payment patterns appear on your credit report.

   • Be aware that paying off a collection account does not remove it from your credit report: it will stay on your report for seven years.

   • Contact creditors or a legitimate credit counselor if you are having trouble making ends meet: This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase eventually. Seeking assistance from a credit counseling service will not hurt your FICO Score.

3. Reduce the amount of debt you owe

   Your credit utilization, or the balance of your debt to available credit and other balance and burden related information, contributes 30% to a FICO Score's calculation. It can be easier to clean up than payment history, but it requires financial discipline and understanding the tips below.

   • Keep balances low on credit cards and other revolving credit: High outstanding debt can negatively affect a credit score.

   • 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. Owing the same amount but having fewer open accounts may lower your scores. Come up with a payment plan that puts most of your payment budget towards the highest interest cards first, while maintaining minimum payments on your other accounts.

   • Don't close unused credit cards as a short-term strategy to raise your scores. Closing credit lines may hurt your score by reducing your overall available credit and increasing your credit utilization ratio.

   How long does it take to improve your FICO Scores?

   Working on your FICO Scores is typically a gradual process that requires patience and consistent effort. The time it takes to see the impact depends on your unique financial circumstances and the actions you take to build or repair your credit, but in general, you may start noticing small changes within three to six months.

   Significant changes can take longer, especially if you’re recovering from issues like late payments, high credit utilization, or negative marks.

   
   

   Watch to see how you can manage your FICO Scores:

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     Managing your FICO Scores - open video

     Managing your FICO Scores

     Video transcript

More tips to manage credit health:

• Know your credit score: Regularly check your credit score to understand where you stand. Make sure you understand the factors influencing your score, such as payment history and credit utilization and note areas you can work on.

• Avoid maxing out credit accounts: It’s recommended to keep your credit utilization (the percentage of your available credit that you’re using) below 30% of your credit limit, and ideally below 10%. Aiming for a lower utilization rate can have a positive impact on your score.

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly: New accounts will lower your average account age, which can significantly impact your scores if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

• Do your rate shopping for a loan within a focused period of time: FICO Scores distinguish between a search for a single loan and a search for many new credit lines, partly by the length of time during which you make your inquiries.

• Re-establish your credit history if you have had problems: Opening new accounts responsibly and paying them off on time may raise your credit score in the long term.

• Request and check your credit report: This won't affect your score if you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

• Apply for and open new credit accounts only as needed: Don't open accounts just to improve your credit mix—it probably won't raise your credit score.

• Have credit cards but manage them responsibly: Having credit cards and installment loans (and making your payments on time) will generally rebuild your credit scores. For example, someone with no credit cards tends to be a higher risk than someone who has managed credit cards responsibly.

• Think before closing accounts: Note that closing an account doesn't make it disappear. A closed account will still appear on your credit report and may be considered when calculating your credit score.

• Credit and financial counseling: Many nonprofit organizations offer free or low-cost credit and financial counseling services. Counselors can provide guidance on budgeting, debt management, housing, and financial education. Learn more about credit and financial counseling.

Additional tips

If you’re looking for even more ways to boost your credit health, consider some of these additional strategies:

• Practice making payments before taking on new debt: If you’re planning to take out a loan or open a credit card, practice setting aside the equivalent monthly payment in advance. This will help build financial discipline and prepare you for responsibility.

• Build an emergency fund: An emergency fund prevents you from relying on credit cards for unexpected expenses, which can help you avoid increasing your credit utilization or missing payments during financial challenges. Try to save at least three to six months of expenses, but more is better.

• Protect yourself against identity theft and fraud: Fraud and identity theft can significantly damage your credit score. To safeguard your credit, monitor your credit report regularly for unusual activity. Use credit monitoring services for alerts on suspicious transactions. And freeze your credit with the major bureaus if you suspect fraud.

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