Does your credit stand in the way of you getting approved for financing for a home or car? Unfortunately, bad credit can prevent more than just getting approved for a loan. In fact, you may have to pay more for insurance and provide a security deposit on utilities if you move. But, financial challenges shouldn’t hold you down. You can improve your credit immediately! Although repairing your credit does take time, it is possible to improve if you are truly dedicated to positive financial habits.

1. Pay your bills on time

This is one of the most straightforward ways to build your credit, as well as establish smart financial habits. If you pay your bills on time, you make certain no payments end up in collections.

  • Create a budget. A budget tells you where your money is going as well as helps you plan to spend it wisely. First, calculate your monthly income each month. Then, add up those expenses in order to get a clear picture of your financial state which will help you see where you can save money.
  • Reduce non-essential expenses. First, make cuts to non-essential expenses. Next, try to make small adjustments like making coffee at home or only going out to eat on Fridays. These small cuts will help you save money, pay down debt and live within your means.
  • Track your spending. Creating a budget is helpful, but you need to also track your expenses. Tracking your spending helps you stick to your budget. In fact, you can write them down in a notebook or apps. By tracking your spending, you’ll be able to know where your money is going.
  • Get current on accounts that are past due, but not charged off. Get in contact with your creditor to find out how to get current on your account. If you pay the debt in full, the account will be paid off and the balance will become zero. It may still stay on your report for seven years after the date of charge off.

2. Review your credit score and history

When beginning to improve your credit, the place to begin is your credit history. You are legally entitled to a free credit report from each of the three credit bureaus each year through By reviewing your credit periodically, you can see if there is information that may negatively impact your score.

  • Look for incorrect information. For example, any incorrectly reported payments, accounts that aren’t yours, etc.
  • Be aware of accounts that are past due, that are late, have been charged off or have been sent to collections, or over the credit limit.
  • Dispute inaccurate or incomplete information. You can do this online or over the phone. If your dispute is legitimate, the credit bureau will investigate and give you a response.

3. Pay down your debts

  • Pay off your debt. If that’s not possible, try to pay if down to as low as you can.
  • Reduce your debt-to-income ratio. When lenders are assessing your loan application, they consider your debt-to-income ratio. The lower your ratio, the more likely you’ll qualify for a good loan.
  • Increase your available credit. If you’ve been a good customer, you may be able to increase your credit limits on your credit card. So, call your credit card company to learn more.

4. Use credit wisely

It is important to use your credit wisely. Here’s how:

  • Do not open new accounts, unless you have to. If you open several new accounts at the same time raises red flags for potential lenders.
  • Remember, keep a low balance on credit cards and revolving credit.
  • So, instead of moving debt to another account or to a new account, pay it off.

5. Seek professional help

  • Notify your creditors and see a credit counselor if you have trouble making ends meet.