5 Ways to Improve Your Credit Score

Grace Lemire
Grace Lemire

Grace Lemire is a freelance writer and editor with over five years of experience in the personal finance industry. She has been featured on a variety of publications, including NPR, CNN, FinanceBuzz, Dollar Geek, Pangea, and True Finance. Her work focuses on the intersection of personal finance and technology. In 2023, Grace was nominated for the Best Personal Finance Advice award in Debt.com’s FinTok Awards.

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Daniel Kahn
Daniel Kahn
Daniel is the co-founder and COO at Sparrow. Daniel is responsible for the day-to-day operations of a company, working closely with other members of the executive team to develop and implement strategies to support the growth and success of the company.
Daniel was a 2023 Forbes 30 Under 30 lister in the Education category.  Daniel was born and raised in Raleigh, North Carolina and graduated from Duke University in 2020.
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Camden Ford
Camden Ford

Camden leads Sparrow’s business operations – everything from product management to business analytics. After graduating Cum Laude from Duke University where he studied Civil Engineering, Camden worked as a Consultant for A.T. Kearney where he worked in their Strategic Operations practice. With a strong background in analytics, Camden strives to deliver data-driven conclusions and insights.

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November 13, 2023

If the cost of the new shoes you just bought is higher than your credit score, let’s chat.

Your credit score impacts your ability to take out loans as well as the interest rate associated with them. If your credit score isn’t as high as you’d like it, or if it isn’t in the range necessary to open a new line of credit, here’s 5 ways you can improve your credit score.

Pay All Your Bills On Time

This one probably sounds like a no-brainer, but making all of your credit payments on time is crucial. Even if you’re just making the minimum payment, paying on time shows lenders that you’re able to keep up with your credit accounts.

Payment history makes up roughly 35% of your credit score1, so making even one late payment could impact your score quite a bit. A few ways to help prevent making late payments include:

  1. Putting a reminder in your phone for a few days before your bill is due every month
  2. Setting up automatic payments so the money comes out directly from your checking account (only do this if you’re sure the money will be there every month to avoid overdraft fees!)

Pay Off Your Debt

This one is also a no-brainer and much easier said than done, but paying off your debt can raise your credit score significantly. You should aim to have around a 30% or less credit utilization ratio. This ratio is the amount that you owe across all credit accounts compared with the total amount of available credit.

Source: Better Pockets

For example, you may have 3 credit cards all with a $1,000 limit. This means your total amount of available credit is $3,000 ($1,000 limit x 3 credit cards = $3,000).

If you owe $100 on the first credit card, $200 on the second credit card, and $300 on the third credit card, you would have a 20% credit utilization ratio ($600 compared to the $3,000 limit).

Paying off the money you owe can help lower your credit utilization ratio which shows lenders that you’re being responsible and not maxing out all of your available credit accounts.

Keep reading: Simple Hacks to Pay Off Student Debt Faster

Limit New Credit Accounts

Applying for a new line of credit will cause a “hard inquiry.” Hard inquiries occur when a creditor requests to look at your credit file to determine the level of risk you pose as a borrower.2 This hard inquiry can actually harm your credit score for the first few months after it occurs. If you’re concerned about your credit score, it’s best to stay away from anything that may harm your score even if it’s just temporary. 

In the event that you do need a new line of credit and want to shop around for the best offers, it is best to do so in a 45 day period. This is because FICO, the most commonly used credit scoring model, considers similar loan-related inquiries that have occurred within 45 days of each other as a single inquiry in the scoring process.

For example, if you shopped around for a student loan with five different lenders over a period of 45 days, FICO would consider those five hard inquiries as one hard inquiry for credit scoring purposes. FICO is able to process your rate-shopping as exactly that: rate-shopping for one loan, not you attempting to take out five separate loans. As you can imagine, attempting to take out five separate loans would raise some red flags to FICO, as where rate-shopping does not.

Keep Credit Card Accounts Open

Closing any credit card accounts you currently have open, for any reason, may not help your credit score in the way you think. Every time you open a line of credit, it adds to the length of your credit history. Credit history is important in calculating your credit score because it proves to lenders that you’ve been able to manage your credit consistently over time. Thus, even if you don’t use a credit card, keeping the account open can help contribute to proving your credit worthiness. 

You may want to consider closing your credit card account, however, if the card has an annual fee that you simply can’t afford.

Pay Attention to the Credit Report

1 in 8 Americans is unaware of their credit score.3 Don’t worry – we won’t let that be you.

Numerous credit card companies, banks, and other financial institutions now offer free credit score reports. If yours doesn’t, you can use the Annual Credit Report to get a free copy of yours every 12 months from each of the three credit bureaus. 

Knowing your credit score is important for a variety of reasons. Not only is it important to understand where you are financially, but it’s important to check for errors, fraud, or potential identity theft. If something just doesn’t look right about your credit report, it’s important to inquire. This level of attention to detail could be the determining factor in you qualifying for a new loan or line of credit.


If your credit score it’s quite where you want it, don’t fret. There are numerous ways to increase it. What’s important is that you remain consistent and dedicated to these methods. If you do, you will notice your score increasing over time.

If you’re worried about how your credit score may impact your ability to take out a student loan, we got you covered there, too. There are lenders that will lend to folks with no credit or bad credit. Check out your options here.

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