How To Raise Your Credit Score In 6 Simple Steps

In my last post, I shared the top 3 things to do when your credit score is high. (Check that post out right here, ICYMI!) 😉 But maybe you might be feeling my tips don’t apply to you, especially if your credit is a less than stellar right now. How can you raise your credit score so you can take advantage of the benefits?

Trust me, I get it. I’ve been there, and believe it or not, it wasn’t that long ago.

It wasn’t until November of 2017 that I decided to take control of my financial life. That project started with tackling my ailing credit score. Now, I know that might sound crazy. I’m an accountant, right? Shouldn’t I know already how to stay out of credit trouble and keep my finances healthy?

Well, here’s the truth…

Knowing how to track your finances is one thing. Following through is something else entirely! This definitely applies when you’re wondering how to raise your credit score.

Sure, I knew what I should’ve been doing. But at the time, I self-sabotaged left and right. I had poor money habits, which created my poor money reality.

Long story short, I knew what to DO. But alas–I didn’t quite know how to BE.

So in November of 2017 I decided that enough was enough, and I took charge. I changed my money habits, one step at a time. 

Before I knew it, my credit score jumped up by 100 points in just 120 days!

I set my intention. I took consistent and dedicated steps. Now I have a healthy credit score and a whole new outlook on my finances!

So wherever you are on your money journey, don’t shame yourself.

Accept everything that happened up until now as learning experiences. Then choose the reality you want to create from here on out. Then, take one step at a time to move toward that desired reality!

By now you’re asking what steps I took that changed my credit score (and my financial life) in such a short time. So let’s get down to the nitty-gritty and get into how to raise your credit score with my 6 simple steps.

Step #1: Know where you stand right now. To get where you want to go, you need to know where you are NOW. That starts with two things: getting a credit score and knowing your budget.Contrary to what you might’ve heard, getting a credit report won’t damage your credit. There might be a small fee (around $29), but it’s worth it.

If you’ve been avoiding facing your credit score for awhile, this is a powerful first step. So take it as soon as you can, no excuses! (Believe me, it’s easier than you think!). So no matter what, get a baseline credit score. Run one once a year as part of your money routine.

Then, once you know your score, know your budget. This is important as you go into step two. Once you know your current budget, you know how much you can afford to pay. Pay who, you ask? Let’s get into step two!

Step 2: Face your creditors. Now you know your basic numbers. It’s time to take a deep breath, dig deep into your courage, and make some phone calls.

That’s right. It’s time to face the music, call your creditors, and work with them to make a plan.

Now, think back to your budget, and keep this number in mind when you call. You need to know your budget so that you can set boundaries for what you can and cannot afford to pay. From here, work with your creditors. Discuss options, begin negotiations, and make a real plan.

This might mean creating an income-driven plan with your student loans. Or lowering monthly payments. It could also mean requesting red mark removals from your credit score.

Believe it or not, creditors aren’t out to shame you or make your life difficult. They want to help, and they can. So work with them to create a realistic and actionable plan for you.

Step 3: Set up auto pay. Late payments kill your credit score. So as soon as you can, set up all your loans and recurring bills on autopay to keep this from happening.

It doesn’t matter if the amount is less than the minimum balance. Be consistent, and don’t miss a beat. This will ultimately raise your credit score and save you money along the way. Late payments incur late fees. Late fees create more debt on your debt (math is strange like that!) 😉

Sometimes when you’re in a tough financial situation, you “forget” to pay bills. It’s easy to avoid facing your finances when you feel depressed, defeated, and broke, right?

But when you avoid the numbers, you contribute to the problem.  Don’t let this happen to you! Use the miracle of modern technology that is auto pay to your advantage. Paying a little each month without missing a beat is better than a slew of late fees!

Pro Tip: Did you make a few late payments recently? Give your creditors a call, explain the situation, and ask them to remove the late fee. Then let them know you’re setting up your account for autopay so that the late payments won’t happen again. After all, the fastest path to forgiveness is promising not to do it again! 😉 

Step 4: Which debt to tackle first? Go for the credit cards. If you have many debt sources and you don’t know what to pay off first, start with the credit cards.

Credit cards are great if you can pay them off in full every month. But if you’re carrying a balance and are paying the minimum every month, they turn into a sinkhole pretty fast. Not only can it be hard to pull yourself out, but paying the minimum every month can hurt your credit.

So do what you can to get those credit cards under control first, and go from there.

Pro Tip: Can’t pay the full amount every month, where do? Make your first goal to bring your balance down to 30% of your available credit. For example, if your credit limit is $5000, get your balance down to $1500, and keep it there or below. The same rule applies to loans, too.

Step 5: Still can’t pay your credit cards? Do this. I know how it sounds to say “just pay off your credit cards.” You might be reading this and saying to yourself, “Really????”

Sometimes credit card debt comes from questionable purchases that you later regret. Other times it’s because of emergencies or transitional situations (divorce, medical emergencies, lay offs, etc.). No matter what your situation, you might be feeling like you can’t catch a break.

Add that to the hamster wheel of payments and interest, and you can go from frustrated to defeated in a flash. Seriously, what happens when you can only pay $150 a month and $97 of it goes to interest? How the hell do you get ahead?

Believe it or not, there is something you can do! Here’s what I did when I was in your shoes…

I called my credit card company, and they converted my credit card debt into a loan with a flat interest rate. Then we negotiated a monthly payment based on my income at the time. When all was said and done, I got a pretty awesome deal!

Instead of paying $150 a month with 90% going to interest, we reduced my monthly payments to $100 a month at 10% interest. Feels like a breath of fresh air, doesn’t it?

Not only did this help me pay off my debt faster, but it also helped me manage my budget more effectively. The only caveat was that I couldn’t use the credit card anymore (as we converted it from a credit card to a loan). But that part was the least of my worries!

So if your credit cards are making you crazy and you don’t mind letting them go, this option might be perfect for you.

Step 6: Create new habits and change your life. I know that the first 4 steps take a lot of energy and dedication. But once you start, you’re going to feel a lot lighter–and even sleep more soundly!

Then, there’s the next step. To continue your empowered money journey, you need a new plan. That means new habits. It’s more than taking the steps once–you’ve got to keep taking them and creating new habits that support your goals!

But the good news is that you don’t have to do it all in one day. Really. So don’t put too much pressure on yourself. Create a plan that you can stick to, and take it one step at a time.

So that is how to raise your credit score in 6 simple steps! Need a little guidance in where to start and which step to take first? Leave me a comment and I’ll answer as best as I can!

Until Next Time,

Love, light, and MONEY, Honey…

Kaylee