Top 10 Ways to Improve Your Credit Score

Hi Debbie,

My credit score is really in the toilet - not sure what to do to improve it besides just making my payments.

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Dear Anonymous,

‍There are lots of new ways to build up each of these categories nowadays, without taking the long, hard road of paying down your debts one by one or hiring an expensive credit repair service. Being good with your payments long term is definitely critical, but here are some shorter term strategies to consider (in order of our most to lease favorite):

1. Check your credit score

Signing up for Credit Karma is easy and free, and will not only give you monthly updates on your credit score, but will break down your progress in each of the previous 5 credit categories mentioned. Understanding your own situation is the first step to building a credit improvement plan.

2. Pay off more strategically

Credit bureau reporting often lags your actual payments by about a month. By paying off your balances more often, even if you break them up into smaller amounts, they are reported to the bureau in time for you to see the credit lift. Try paying half your monthly balance in the middle of the month and the rest at the end.

3. Get a credit-building debit card

If you've been burned by credit cards and feel yourself unable to manage them, but also feel that debit cards don't offer any value, consider a credit-building debit card. This is a super innovative and totally new financial product - most of them charge a monthly fee, but it's typically far less than the annual fees you pay for the best credit cards. We recommend you check out the ones below:

• ‍Extra App: Layers on top of your existing bank account and offers a debit card with credit building and rewards powers. Costs $7/month.
• ‍Zoro Card: Replaces your existing checking account, helps you build credit with debit for $3/month.
  

4. Ask for a credit limit increase

Because credit utilization is measured as a percentage of your total credit limit, asking for an increase maybe be helpful in bringing your utilization down if you continue to spend the same amount each month. This can be risky as we have been known to be tempted to use the newfound limit‍

5. Report rent payments, subscriptions, or other bills to credit bureau

There are plenty of tools today that allow you to report expenses that wouldn't otherwise go on your credit report.

• ‍Experian Boost: Reports utilities, subscriptions, and phone bill
• ‍Esusu Rent: Reports rent
• ‍Rental Kharma: Report rent
• ‍LevelCredit: Report rent, cell phone, and utility
• ‍GrowCredit: Report subscriptions‍

6. Try a credit builder loan or secured credit card

Credit builder loans are designed for folks who have little to no credit history and cannot qualify for any credit card. If you are looking to start on your first credit card, there are several that approve fairly easily. Petal, Capital One, and Amex all have cards that are fairly easy to get started on without a credit score. However, if even those fail, you can turn to credit builders.

Typically, these loans are a small amount (anywhere from $500-$1000) with a defined payment plan to get you started on building a credit score. Of these, our favorite is Kikoff because they actually allow you to buy items from their store with the credit line and has 0 fees. Other major players include Self, Seedfi, and CreditStrong. However, most of these charge additional fees that may not be worth it.

As for secured credit cards, they typically come with a required deposit and your limit usually equals this amount. You can't earn interest on this amount while it's in there, and you still pay interest as you would with a credit card. The one exception is the Chime Credit Builder card - which you can consider if you're already a Chime customer.‍

7. Dispute errors on your report

Always make sure to check your account for strange or fraudulent account activity, as sometimes creditors do not report properly. Make sure to file disputes with all of the major credit bureaus below

• ‍Equifax
• ‍Experian
• ‍Transunion

‍8. Pay off collections

Collections can have an extreme negative impact to your credit score. Try not to let things go to collections, but if they do, do not avoid the collections agency. They typically will negotiate your bill as well if you push them.

Medical bills are the largest category for debt collections - we know these bills are hard to pay, but you can often negotiate with your physician or set up a payment plan.

For more info on medical debt, click here.

9. Get a co-signer

Putting a parent or relative on your account can be risky, but you may be able to get approved if you include someone with a good credit score.

10. Become an authorized user

As a corollary, you can build you credit score initially by getting added to your parents' or relatives account. Simply by having your name on the account, not spending, you are able to piggy back off the account's activity. This can also be risky if the person is not the most financially responsible, so choose wisely.

11. Sign up for Debbie

Around 30% of our users report seeing an increase in their credit score just from using the Debbie app (the app that rewards you for paying off debt) for a few months. We don't do any tricks or move money around, and most importantly, we don't charge. The app is 100% free - so how does your score increase? Just by being engaged with your debt payoff journey, meeting your monthly goals, and being on top of your cards you can improve your credit significantly without paying expensive credit repair shops. Sign up for the app here.

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To ask your own question and see it here, email us at ask@joindebbie.com or join our FB community.

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