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The Secret to Moving the Needle on Your Credit

Person sitting down in chair with hand holding phone with credit score on screen

Do these things to begin improving your credit score:

With millions suffering job losses during the COVID-19 global pandemic and perhaps falling behind on some bills, it’s a good time to discuss how to build up and maintain a solid credit score. A good credit score, after all, provides you with the best chance of applying for and receiving low-interest mortgages, car loans, and lower rates on credit cards.

Why does that matter? Someone who qualifies for low-interest rates can end up paying thousands less on everything from automobiles to college tuition to a new home. Which is why it’s important to begin building your credit back up if it has started to slip.

First of all, don’t panic. With historically low-interest rates in the U.S. expected to stay that way for a while, now is the perfect time to get to work moving the needle northward on your credit score so you can eventually reap the rewards.

Create a budget

It’s vital to have a solid foundation in place as you begin to rebuild or strengthen your credit score.

You need to have a budget and a way to track your spending. When you are trying to rebuild your credit score you need to be aware of your debt and stay below your credit limits. Really focus on sticking to your budget.

With so many economic changes in 2020, it makes sense to adjust your budget now to account for less money, or more if that’s the case, coming in each month. Living within your means, and not spending more than you earn, will help put you on the road to a better credit score.

Pay bills on time every time

Understanding how credit scores are calculated also can help move your score up. Credit scores take into account several factors including your payment history and credit utilization ratio, which compares the amount of credit being used to the amount of total credit that’s available to you. A low utilization ratio is great for your credit score. It means that you have a lot of available credit but not much debt. While it’s acceptable to carry a 30% utilization when trying to build up better credit try to keep it as low as you can, below 10% is even better. For example, if you have a $500 limit, try not to have more than $50 on the card. The simplest rule to follow is to pay all of your bills on time every time and keep low balances on credit cards. To help with this, consider setting up auto-pay with your bank or credit union or set yourself an electronic calendar reminder the day before or on the day a payment is due.

Use credit cards at least once a month

This might seem counter-intuitive, but these days you have to use your credit cards or risk losing them. If you don’t use your credit card at all during a six-month period, it may be considered inactive and your card issuer may cancel your account.

Unfortunately, having an account closed will also impact your credit score. To keep your cards active, be sure to use each card once a month or so, even if it’s for something you might typically pay cash for, such as coffee or lunch.

Consider a secured card

Another option for those with very limited credit, or those trying to rebuild credit is to get a secured card from a bank or credit union. A secured credit card uses the money you place in a security deposit account as collateral. A security deposit gives a lender the confidence you will pay them back, even if you have damaged credit or no credit history.

Bottom line it for me

So, how long does it typically take to see your credit improve? By keeping low balances and making timely payments for six months, you should start to see an improvement in your credit score. Remember, slow and steady wins the race.

Credit: Jean Chatzky via


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