A 12-Step Action Plan To Improve Your Credit Score

Boost Your Credit Score in Just 12 Steps: A Simple Guide to Financial Freedom

Let’s face it—getting your credit score up can feel like a mystery. But the truth is, improving your score is easier than you think if you know where to start. With over a decade of experience helping thousands repair and raise their credit scores, I’ve created a 12-step action plan designed to deliver results. Follow these steps, and in six months, you’ll be amazed by the progress you can make.

Step 1: Get Your Credit Report and Spot Errors

Start by pulling your credit report from [AnnualCreditReport.com](https://www.annualcreditreport.com). Errors like outdated payment statuses or incorrect credit limits are more common than you’d think. Review carefully, and if you spot any inaccuracies, send a certified letter to the credit agency. Thanks to the Fair Credit Reporting Act, they have 30 days to correct any errors. And remember, if a closed account appears open, it might actually benefit you—so no need to change it.

Step 2: Automate Your Bill Payments

Missed payments can sink your credit score fast. Set up automatic payments for at least the minimum on each credit account. This is a surefire way to avoid late payments, even if life gets busy.

Step 3: Get Current on Missed Payments

If you’ve missed payments in the past, get current as soon as possible. While late payments can stay on your record for up to seven years, paying on time consistently will gradually repair your score.

Step 4: Keep Balances Low

Credit utilization, or the percentage of your credit you’re using, heavily impacts your score. Aim to keep balances below 10% of your available credit to keep your score healthy.

Step 5: Avoid Excessive Balance Transfers

Transferring balances between cards can sometimes harm your score, especially if you consolidate balances into one large amount. It’s often better to keep small balances across a few accounts rather than one large balance on a single card.

Step 6: Pay Your Credit Card Bill Early if You Have High Balances

Your credit score calculation includes your statement balance, so paying down your balance early can improve your utilization ratio, especially if you tend to carry high balances.

Step 7: Keep Old Accounts Open

The age of your credit accounts is a positive factor in your score. Closing older accounts shortens your credit history, so keep them open to maintain a strong, long credit history. Also, try to get added as an authorized user to your grandparants or parents oldest credit cards. However, make sure they have great credit before being added.

Step 8: Use Your Old Credit Cards

Inactive accounts can get closed by the credit card company, reducing the average age of your accounts. Keep these accounts open by putting a small monthly charge on them.

Step 9: Show Credit Responsibility

Proving you can responsibly handle credit is essential. Don’t open accounts unnecessarily, as this can make you look like a risk to lenders.

Step 10: Group Loan Shopping into a Short Time Period

When shopping for a loan, limit applications to a 30-day window. FICO considers multiple inquiries over a short period as “rate shopping,” so they won’t count against you.

Step 11: Understand “Soft” vs. “Hard” Inquiries

Checking your own score (a “soft inquiry”) doesn’t impact your score. Hard inquiries from lenders do, so check your credit score wisely.

Step 12: Consider Credit Monitoring and Identity Theft Protection

Credit monitoring can help you catch identity theft early. For a small monthly fee, credit bureaus offer 3-in-1 reports and identity theft protection, which can be worth the peace of mind.

Empower Your Financial Future

By following these steps, you’ll not only be on your way to a higher credit score but also build a more secure financial future. Each step is designed to help you not just increase your credit score but also develop financial habits that will benefit you for life.