Man in suit standing with arms crossed with graphics reading BAD CREDIT and GOOD CREDIT on either side of him.

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Bad credit is one of the most frustrating financial problems because it affects your life in so many ways. You'll need to pay higher interest rates when borrowing money. It can stop you from getting approved for credit cards and loans, and even impact apartment applications. In many states, car insurance rates are also higher for consumers with lower credit scores.

If you have bad credit, you probably know you need to improve it. The hard part is figuring out how. To help with that, here are some simple steps you can take to boost your credit score

1. Use a credit score tool to monitor your credit

The only way to know whether your credit score is improving is to keep an eye on it. Fortunately, there are quite a few free ways to get your credit score. These services typically provide an updated credit score every month. They also often give you tips to improve your score based on your credit profile.

2. Review your credit report from each credit bureau

Your score is based on the information in your credit report. If there's anything inaccurate there, it could hurt your score. The best way to avoid this is to regularly review your credit reports.

There are three consumer credit bureaus that put together credit reports: Equifax, Experian, and TransUnion. Sometimes there are differences in the information each one has for you, so make sure you get your credit reports from each credit bureau.

You can get your credit reports online at You're normally legally entitled to one free credit report from each credit bureau per year, but the three bureaus are offering free weekly credit reports through April 2021 because of the COVID-19 pandemic.

3. Dispute inaccurate items on your credit file

Getting negative items removed from your credit file could lead to a big increase in your credit score. Common incorrect items include:

  • Accounts incorrectly reported as late or delinquent
  • Accounts reported with the wrong balance or credit limit
  • Accounts belonging to another person who has the same or a similar name
  • The same debt listed multiple times
  • Fraudulent accounts opened because of identity theft

If you find any inaccuracies on your credit report, dispute them. This is easy to do online. Here are the links to dispute items with each credit bureau:

4. Get current on any delinquent accounts

Your payment history is the biggest factor used to determine your credit score. Late payments can dramatically lower your score, and the longer you go without paying, the more damage it will do. Note that a payment must be at least 30 days late before the creditor can report it as delinquent to the credit bureaus.

If you have any delinquent accounts, it's important to make payments on them ASAP. This will stop the account from getting any further past-due and hurting your credit even more. If you can't make your payment, try contacting the creditor to see if you can pay a reduced amount.

5. Pay down credit card balances

Another component of your credit score is your credit utilization ratio, which is the amount of available credit you use. Here's a quick example. Say you have a credit card with a credit line of $10,000. If your balance is $8,000, your credit utilization would be 80%.

High credit utilization is bad for your credit. The higher it is, the more your credit score will drop. A good credit utilization to aim for is 20% or less. If you have $10,000 in credit lines from all your credit cards, you'd want to always keep your total balances below $2,000.

That may seem like a challenging goal right now. Remember that every bit of progress helps. As you pay down credit card balances, you'll see your credit score increase.

6. Use a credit card regularly -- and pay it off on time

For a good credit score, you need to build a strong payment history. The most effective way to do that is to use a credit card regularly and pay the bill on time. Make sure to pay in full so you don't get charged any interest. 

The reason this works is simple. When you use your credit card, you're borrowing money. If you pay on time, a positive item gets reported on your credit file. Every month you do this, you build up a longer history of on-time payments. If you can't qualify for a regular credit card, a good secured credit card might be an option.

7. Apply for new accounts sparingly

While you're working on your credit, it's best to limit credit card and loan applications. There are two reasons for this:

  • Each time you apply for new credit, the lender will perform a hard credit inquiry. This has a small negative impact on your credit score.
  • The average age of your credit accounts affects your credit. When you open a new account, that average age will decrease, which can also damage your credit score.

You don't need to avoid credit applications entirely, but you should be selective. For example, if you already have a credit card, it doesn't make sense to open another until you've improved your credit score.

Your roadmap to better credit

Once you know the right steps to take, there's nothing particularly complicated about raising your credit score. That doesn't mean it's easy -- some of the steps above require hard work and take time. But if you're willing to put in the effort, you'll be rewarded with a much better credit score.