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How Can I Improve a Bad Credit Score to Fair?

If you have bad credit and are having trouble getting approved for a new loan, it may be time to focus on increasing your credit score. You can improve a bad credit score by following a few simple steps—which could help you save thousands of dollars.

What Is Considered a Bad Credit Score?

Credit scores are used by lenders to judge how likely it is that a borrower will pay back their debt. The FICO® scoring model, used by the majority of lenders, places credit scores in a range from 300 to 850. Those scores are broken into different ranges, also called credit bands.

Within these ranges, scores between 300 and 579 are considered very poor, while scores between 580 and 669 are considered fair. Anything above 669 is considered good, very good or exceptional, depending on where it falls. Having a fair score is better than having a very poor score, but ultimately you should aim to get your score to good or above to maximize your financial possibilities.

How Can I Boost My Bad Credit Score?

Improving a bad credit score can seem daunting, but in reality, it might not be too hard. Typically it takes time for credit scores to change, but a new tool called Experian Boost is helping many people increase their FICO® Score* instantly. Boost uses your on-time utility and telecom payments to help improve your FICO® Score.

With Experian Boost, consumers can connect their Experian account to their bank accounts to identify utility and telecom payment history. Once you confirm the data, it is added to your Experian credit file and a new FICO® Score is calculated in minutes. You can learn more about how Experian Boost works here.

Experian Boost is free and easy to use, and it's a great score-boosting option for people who have a record of on-time utility or telecom payments. The increase from using Experian Boost could be enough to move your score from very poor to fair and is a great first step in improving your credit score.

Steps to Boost Your Credit Score to Fair and Above

Beyond Experian Boost, you can increase your FICO® Score by adopting a few key habits. Start with these four steps:

  1. Pay all your bills on time. Payment history is the most important aspect of your FICO® Score, and even one late payment can negatively impact your score. Make sure to pay all your outstanding bills, and continue to make payments on time if you want to improve your credit scores over time.
  2. Be mindful of your credit utilization ratio. Credit utilization is calculated by dividing the amount of credit you are currently using by the total amount of credit available to you. This means the more you spend on your credit cards, the higher your utilization ratio will be. Credit utilization is the second most important aspect of your FICO® Score, accounting for 30% of your score. To improve your credit scores, keep your utilization ratio under 30%—under 10% is even better.
  3. Dispute inaccurate information in your credit reports. Mistakes happen and inaccurate information can sometimes make its way into your credit file. Monitoring your credit reports is an easy way to uncover any false information or errors. If you see something out of place, file a dispute with the creditor and the credit bureau as soon as possible.
  4. Avoid applying for too much new credit. Every time someone other than you requests your credit report—which happens each time you apply for new credit—a hard inquiry is recorded in your credit file. Hard inquiries stay on your credit report for up to two years, and in some cases can bring down your credit scores. Hard inquiries indicate how much credit you've applied for, and multiple applications within a short period can signal to a lender that you may be overextended. Try to limit or spread out your new credit applications to make sure they don't negatively affect your credit scores.

In addition to the above tips, getting a copy of your free credit report will give you an idea of what might be bringing your score down. Once you have an idea of what's in your reports, follow our tips and continue to practice good credit habits to help improve your scores over time.

How Good Is Your Credit Score?

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