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Having a low credit score can leave you in an unfortunate spot. It can severely restrict you from accessing financial tools, like a loan or credit card. Plus, for some, the embarrassment can be overwhelming.

Fortunately, it’s not the end of the world. You can rebuild credit, no matter how bad it gets. You just need both time and discipline.

In this article, we’ll show you how to build credit. You can pick any of the tips from our list, or try out all of them. The most important thing is to be consistent in your efforts.


Use a Secured Credit Card

The easiest way to work on how to improve a credit score is to get a secured credit card. It’s just like any other credit card, but with one critical difference. The issuer requires you to deposit cash upfront (often matching the card’s credit limit) before you can use the card. Once you close the card account, the bank will return this money to you.

A secured credit card is often the best way to build credit when you’re starting from scratch. As you keep paying your card balance on time, your credit score will gradually improve. You can do this until your credit score improves enough that you qualify for a regular credit card.

When picking a secured card, make sure it has a low annual fee. And more importantly, the card issuer should be reporting your transactions directly to all major credit bureaus.


Pay Bills on Time

When discussing how to build credit, the most effective and time-tested way is to pay your bills on time. That’s because your credit score predicts how reliable you are with your financial obligations. Hence, credit bureaus love to see customers that are responsible enough to pay their bills on time every month.

Make sure you’re not paying your credit card bills past their due dates, and, if possible, that you don’t leave any outstanding balances. You should also try to pay other debts like student loans and mortgages on time.


Open a Joint Account

Having a low credit score can prevent you from being approved for a loan or credit card.  If you someone with a better credit score, like a trusted family member or partner, you can open a joint account. Someone else can also add you as an authorized user to their existing credit card.

Once you get access to a joint account, use the credit card as usual and pay your monthly bills on time to improve your credit score. Just be sure you pay your portion of the bill on time or the original cardholder will also suffer penalties on their credit score!


Request a Higher Limit on Your Credit Card

After you’ve beefed up your score a bit, you can explore more options on how to raise your credit score further. One of these is requesting a higher limit on your credit card.

Having a higher credit limit on your card is one of the easiest ways to build credit because it has a positive effect on your credit utilization. Your utilization is a ratio of your available credit versus how much of it you’re using. To improve your credit score, you need to maintain a low ratio (ideally, less than 30%).

When your credit limit increases, your utilization ratio naturally lowers and boosts your credit score. Just don’t be tempted to swipe more, or you’ll end up raising your utilization and doing more harm than good.


Never Close Your Credit Card Account

When people are figuring out how to build credit, they often assume they should close unused credit card accounts. After all, that’s less temptation to spend unnecessarily.

However, closing your card accounts can hurt your credit utilization ratio. By closing accounts, you’re reducing your available credit limit, but your balance remains the same. Generally, as long as your credit cards don’t have annual fees, keeping them open is a smart move.


Get a Credit-Builder Loan

Thinking of how to increase a credit score without too much risk? A credit-builder loan is a great solution.

As the name suggests, a credit-builder loan is a special loan used solely to improve your credit score. Unlike a traditional loan, you don’t get the funds until you’ve fully paid the loan. In many ways, it feels more like a forced savings account than a loan.

Every payment you make on a credit-builder loan is reported directly to credit bureaus, giving your score a boost as long you settle on time. It’s one of the best ways to build credit because it forces you to be diligent with your obligations.


Review your Credit Scores Regularly

One of the most critical aspects of how to raise credit score is to continually monitor your progress. CreditAssociates offers a free debt health check so you can check how your efforts are paying off. More importantly, you can also check for errors in your credit score.

You can’t improve what you don’t measure, so reviewing your credit score monthly is an excellent habit to pick up.

Building and maintaining a good credit score is the foundation of your financial health. And debt is one of the most significant factors affecting it. If you’re struggling to pay your debts off, it’s best to work on them sooner rather than later.

That’s where we can help. For more information, request a free consultation with our Debt Consultants today. They’ll walk you through our debt-relief program and put together a personalized plan for you.