Improving your credit score, you start by checking your credit scores online. When you get your scores, you will also get information about which factors are affecting your scores the most. These risk factors will help you understand the changes you can make to start improving your scores. You will need to allow some time for any changes you make to be reported by your creditors and subsequently reflected in your credit scores.
Of course, certain credit score factors are typically more important than others. Payment history and credit utilization ratios are among the most important in many critical credit scoring models, and together they can represent up to 70% of a credit score, which means they’re hugely influential.
Focusing on the following actions will help with improving your credit score. A credit score reflects credit payment patterns over time, with more emphasis on recent information.
1. Pay Your Bills on Time
When lenders review your credit report and request a credit score for you, they’re very interested in how reliably you pay your bills. That’s because past payment performance is usually considered a good predictor of future performance.
You can positively influence this credit scoring factor by paying all your bills on time as agreed every month. Paying late or settling an account for less than what you originally agreed to pay can negatively affect credit scores.
You’ll want to pay all bills on time—not just credit card bills or any loans you may have, such as auto loans or student loans, but also your rent, utilities, phone bill and so on. It’s also a good idea to use resources and tools available to you, such as automatic payments or calendar reminders, to help ensure you pay on time every month.
If you’re behind on any payments, bring them current as soon as possible. Although late or missed payments appear as negative information on your credit report for seven years, their impact on your credit score declines over time: Older late payments have less effect than more recent ones.
2. Get Credit for Making Utility and Cell Phone Payments on Time
If you’ve been making utility and cell phone payments on time, there is a way for you to improve your credit score by factoring in those payments through a money app.
Through these apps, consumers can connect to their bank accounts to identify utility and telecom payment history. After a consumer verifies the data and confirms they want it added to their credit file, an updated Score will be delivered in real time.
3. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit
The credit utilization ratio is another important number in credit score calculations. It is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit.
For example, if you typically charge about kes 20,000 each month and your total credit limit across all your cards is kes 100,000, your utilization ratio is 20%.
To figure out your average credit utilization ratio, look at all your credit card statements from the last 12 months. Add the statement balances for each month across all your cards and divide by 12. That’s how much credit you use on average each month.
Lenders typically like to see low ratios of 30% or less, and people with the best credit scores often have very low credit utilization ratios. A low credit utilization ratio tells lenders you haven’t maxed out your credit cards and likely know how to manage credit well. You can positively influence your credit utilization ratio by:
- Paying off debt and keeping credit card balances low.
- Becoming an authorized user on another person’s account (as long as they use credit responsibly).
4. Apply for and Open New Credit Accounts Only as Needed
Don’t open accounts just to have a better credit mix—it probably won’t improve your credit score.
Unnecessary credit can harm your credit score in multiple ways, from creating too many hard inquiries on your credit report to tempting you to overspend and accumulate debt.
5. Don’t Close Unused Credit Cards
Keeping unused credit cards open—as long as they’re not costing you money in annual fees—is a smart strategy, because closing an account may increase your credit utilization ratio. Owing the same amount but having fewer open accounts may lower your credit scores.
6. Don’t Apply for Too Much New Credit, Resulting in Multiple Inquiries
Opening a new credit card can increase your overall credit limit, but the act of applying for credit creates a hard inquiry on your credit report. Too many hard inquiries can negatively impact your credit score, though this effect will fade over time. Hard inquiries remain on your credit report for two years.
7. Dispute Any Inaccuracies on Your Credit Reports
You should check your credit reports at the credit reference bureaus (CRB) (is a firm that is licensed by the Central Bank of Kenya to collect, manage and distribute credit information) for any inaccuracies. Incorrect information on your credit reports could drag your scores down. Verify that the accounts listed on your reports are correct. If you see errors, dispute the information and get it corrected right away.
Related: What You Might Not Know About Credit Scores
How Long Does It Take to Rebuild a Credit Score?
If you have negative information on your credit reports, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you should pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores.
The length of time it takes to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit reports, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age.
- Delinquencies remain on your credit report for seven years.
- Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years.
- Inquiries remain on your report for two years.
Rebuilding your credit and improving your credit scores takes time; there are no shortcuts. Start improving your credit by checking with a CRB and reviewing the individual factors that are affecting your credit scores. Then, learn more about how to build credit to improve your scores. And if you need help with credit mistakes from your past, you can learn more about credit repair and how to fix your credit.