Ways to Improve Your Credit Score

A good credit score can open doors with lower interest rates, better loan approval odds, and more financial flexibility. Whether you're starting fresh or rebuilding, improving your credit takes patience, focus, and good habits. At 1st Community Credit Union, we believe everyone deserves the tools to strengthen their credit profile.

Here are key strategies to help you improve your credit score step by step.

1. Understand What Impacts Your Credit Score

Before making changes, know what lenders look at. The main factors influencing credit scores are:

• Payment History (on-time payments vs. missed/late ones) — typically the biggest portion.
• Amounts Owed / Credit Utilization — how much of your available credit you’re using. Keeping balances low helps.
• Length of Credit History — older, well-maintained accounts show long-term reliability.
• Credit Mix — a mix of credit types (credit cards, installment loans, etc.) can help.
• New Credit / Credit Inquiries — each time you apply for new credit, it may cause a “hard inquiry,” which can have a minor negative effect.

Knowing these helps you target the areas that matter most.

2. Check Your Credit Reports Regularly and Fix Errors

Get a copy of your credit reports from the three major credit bureaus (Equifax, Experian, TransUnion). You’re entitled to at least one free report annually via AnnualCreditReport.com.

Once you have your report:

• Review all entries carefully: account balances, payment history, open accounts, inquiries.
• Watch for mistakes or fraud: wrong balances, accounts that aren’t yours, or late payments incorrectly reported.
• If you see errors, file a dispute with the credit bureau(s) and the creditor involved. Correcting errors can sometimes lead to relatively fast improvements.

3. Pay Bills On Time — Always

Your payment history is often the most heavily weighted factor in credit scoring. Late or missed payments hurt, especially if they end up in collection. On-time payments over many months or years build solid credit. 

Tips to keep up:

• Set up automatic payments or reminders.
• Prioritize paying off debts that are already late.
• If you’re struggling financially, reach out to creditors early—sometimes arrangements or forgiven late fees may be possible.

4. Keep Your Credit Utilization Low

Credit utilization refers to the percentage of your available revolving credit (credit cards, lines of credit) that you are using. For example: if you have a total credit limit of $5,000 across all cards, and your total balances are $1,500, your utilization is 30%. Lower is better. Ideally, keep utilization under 30%, and even better if you can stay closer to 10-20%. 

Ways to do this:

• Pay down credit card balances early (not just at statement due date).
• Spread out purchases across multiple cards rather than maxing one.
• Request credit limit increases, but only if you won’t be tempted to spend more.
• Avoid carrying large balances if you plan to apply for credit soon.

5. Don’t Open Too Many New Accounts at Once

While having more credit (when managed well) can help, opening many new lines of credit in a short period can hurt:

• Each new application often leads to a hard inquiry, which can lower your score.
• New accounts reduce the average age of your credit history, which can negatively affect scoring.

Only apply for new credit when you really need it and when the terms are favorable. Wait until existing accounts are in good standing.

6. Maintain Older Accounts & Build a Healthy Mix of Credit

• If you have older credit card or loan accounts that are in good standing, keep them open. They help extend your credit history and strengthen your profile.
• A credit mix (revolving credit like credit cards plus installment credit like car loans, mortgages, or personal loans) shows lenders you can manage different types of debt responsibly. Only take on new debts if they make sense and are affordable. 

7. Pay More Than the Minimum When Possible

Minimum payments keep your account in good standing but don’t reduce your balance quickly. Paying more than the minimum:

• Reduces interest charges.
• Decreases total debt faster.
• Helps lower credit utilization.

Even small extra payments can make a difference when done consistently.

8. Be Patient & Monitor Your Progress

Improving credit doesn’t happen overnight. It takes consistent efforts over months and years. But you will see changes if you adopt good habits, manage debt, and fix errors.

Tools that can help:

• Credit monitoring services (many credit unions offer these or something similar).
• Alerts for payment due dates.
• Periodic review of your credit score, so you can see which actions lead to improvement.

9. Use Resources from 1st Community Credit Union

As a member of 1st Community Credit Union, you have access to unique advantages:

• Credit-builder products: A share-secured personal loan is an accessible, low-risk way to build or repair credit history by demonstrating responsible payment behavior to credit bureaus.
• Financial counseling and education: Speak with our staff for personalized tips, budgeting help, or debt-management plans.
• Affordable lending options: Credit unions often offer lower interest rates and more member-friendly terms, which can make managing and paying down debt easier.

Final Thoughts

Improving your credit score is a journey. It takes consistent payments, reducing debt, monitoring your credit report, and being strategic about when and how you use credit. But with effort, you’ll build a stronger credit profile that creates better borrowing options, lower costs, and greater financial stability.
At 1st Community Credit Union, we’re here to help, whether you’re just starting out, rebuilding, or working toward your long-term financial goals. If you want tailored advice or want to explore our credit-building tools, reach out to us. Your best credit score is within reach.