It is important to know how to improve your credit score as your credit score could save you thousands when buying a car or purchasing a home. In order to improve your credit score you must understand what factors determine your credit score. If you a just starting out, chances are you only have one or two generic credit cards. If you do not have a history of credit or have poor credit, chances are your credit score is pretty low. When I got my first credit card, my credit score was terrible, so I did some research and eventually got excellent credit! Below are some quick ways to improve your credit score.

  1. Check your credit score – There are free websites, such as (my favorite) which will give you a full credit report. The site is completely free and once you “unsubscribe” from their mailing list, they won’t bother you again. Getting my initial credit score was painless and I was also notified of an outstanding bill owed to a cable company from a year prior dragging down my score.
  2. Start small – Once you get your credit score, you will learn what type of card you can be accepted for. Most of the most rewarding credit cards require “excellent” credit to open an account. If your credit card is less than excellent, chances are you’re not going to get approved for the top tier American Express Platinum or Citi Prestige credit cards. My recommendation is to go out and get an entry level credit card with minimal rewards to build credit.
  3. Building Credit – My first credit card had a credit limit of just $500. The key is to keep an open balance of less than 30% of your credit limit. (Credit Utilization) Whenever I would reach an open balance of around $150, I would pay off my balance in full. Usually a few payments each month to keep credit utilization under 30%.
  4. Pay off Credit Card Balances – By far one of the most important factors of raising your credit score is paying off all credit card balances in FULL each month. DO NOT carry a balance on your credit card. This really hurts your credit score! Also, the interest charged on credit cards is outrageous and you can find yourself in a hole fast. has a great interest/payoff calculator to show how much you spend on interest by making only minimal payment.
  5. Limit Credit Checks – Each time you apply for a credit card, auto financing, home mortgage, apartment lease, new job, etc. chances are you’ll get a credit check to make sure you can afford what you’re signing. Each credit check is a minor ding to your credit score. When I apply for a credit card I usually see a 30-50 point dip in my credit score which takes about 3 months to return to its normal level.
  6. Leave Credit Cards Open – Closing a credit card is more detrimental to your credit score than opening a card. Unfortunately, credit agencies believe closing a card is a sign you can’t control your current credit and therefore your credit score drops when you close a card. I realize some credit cards carry annual fees, but generally if you call the credit card company and tell them you’re “thinking” of closing the card due to the annual fee they may waive the fee for a year or send you some extra points/miles. Try to keep this in mind when opening credit cards so you don’t end up with several cards with extremely high annual fees.
  7. Open a Card with a Monthly Credit Score – There are now several cards our there which offer a free monthly credit score. The credit score isn’t as detailed as a full credit check from, but it will help you get a better understanding of your credit score and notify you of any major changes in your credit score on a monthly basis.

This website has a great chart to show you exactly how your credit score is calculated.

Building credit early is important and can be a big help when making MAJOR purchases such as a home or a car! Please, please be responsible with credit cards. I’ve seen way too many people open a card to pay off another! The sad reality of credit cards is a large number of users use them to live outside of their means and get caught up in debt and interest payments. Please pay off credit cards in full each month and only spend what you can afford!

Safe Travels!