Tips on how to improve your credit score

Bad credit loans

If you have a bad credit score, don’t worry, you’re not the only one. Thousands of Americans have bad credit scores and have a hard time getting approved for conventional loans.

While it’s a struggle to fix your credit score again, it’s not impossible. There are several things you can do to improve it.

Depending on what created your bad credit score, you can get as much as 100 points in a short time. It happens when you’re in the poor or fair areas of credit score ranges. However, is it possible to improve your score by 100 points? Yes. It’s true if you position yourself to make gains as quickly as possible.

So how would you do that? Here are two things you can do.

Paying Off Credit Card Debt

When consumers pay off their debts, they decrease their credit utilization rate. Your credit utilization ratio is calculated by comparing your used and available credit. If it’s more than 30%, it’ll negatively affect your credit score. However, if you pay off your credit card debt on time, the percentage will be lower.

For example, let’s say that Jane and John both have credit card balances of $2000, and both of their available credits are $5000. It means they both have a credit utilization of 40%.

Now, let’s say that they both get stimulus checks worth $1,200 each. Jane wants to put all of this to pay her balance, while John only wants to put $600 in his balance. It would decrease Jane’s credit utilization rate to 16%, while John would have 28%.

The lower your credit utilization rate is, the better your credit score will be. As a cardholder, you should aim to lower your credit utilization rate on all of your cards if you want to have a stellar credit score. Experts recommend that you should have less than a 30% credit utilization rate on all of your credit card accounts.

John’s credit utilization rate would only be below 30% in the above-given scenario, while Jane’s will be under 20%. This example is quite vague since your credit score is not only based on your credit utilization rate.

Your credit score also gets affected by different loan accounts, like personal or bad credit loans. Having a diverse profile also positively affects your credit score. However, you should maintain a credit utilization rate below 30% on all accounts to have a good credit score.

Your credit utilization rate makes up 30% of your overall credit score, so it should be in your best interest to pay off your credit card debt.

Be an Authorized Credit Card User

Being an authorized credit card user is very helpful while building your credit score. If the primary cardholder has a history of paying debts and monthly payments on time, it would also reflect in your credit score as an authorized user.

However, not all credit issuers report authorized user accounts to credit bureaus. So before you become an authorized user, you should check if the credit issuer of the primary cardholder reports authorized users.

Credit scoring models differ in how they weigh authorized users. In other words, the influence primary users have on their authorized users is based on different factors.

For someone just building their credit, the primary holder’s performance on paying back their debts and accounts will hugely impact the authorized user. It’s because credit bureaus will primarily base the authorized users’ credit history on the credit history of primary holders.

However, the difference won’t be much for someone who’s piggybacking on the primary holder to improve their established credit score since they already have a significant credit history.

Being an authorized user also has its risks. The primary holder’s negative performance will also reflect on your credit score, whether you’re just starting to build or looking to improve your credit score.

However, it mainly depends on the credit bureaus. For example, some credit scoring agencies include the adverse payment history of the primary holders when calculating the authorized user’s credit history, while some don’t. But even if that’s the case, a high credit utilization ratio on the primary holder will reflect on all authorized users. So before you ask to become an authorized user, check if the primary holder’s account has less than a 30% credit utilization ratio.


Improving your credit score isn’t easy. Although there are many things you can do to improve it, it still boils down to paying off your balance and ensuring that you don’t miss any payments. The tips mentioned above are just to put you on the right track, and it’s up to maintain that track.