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How you can get your credit back on track

Your credit score determines the interest rates on car loans, mortgages, personal loans, credit lines, and just about any type of credit extended to you by a financial institution. Bad credit can cost you thousands. Maybe even HUNDREDS of thousands over your lifetime.

Getting your credit back on track can be a daunting task, but it is possible with determination and discipline. There are several steps you can take to improve your credit score and get your finances back on track.

First, it is important to understand what factors affect your credit score. Your credit score is determined by factors such as your payment history, credit utilization, credit history length, types of credit used, and new credit.

  1. Payment history is the most important factor, making up 35% of your credit score. It is essential to make all of your payments on time, as even one late payment can significantly lower your credit score.

  2. Credit utilization, or the amount of credit you are using compared to your available credit, makes up 30% of your credit score. It is recommended to keep your credit utilization below 30%.

  3. Credit history length, or the number of years you have had credit accounts, makes up 15% of your credit score. It is important to have a long credit history, as this demonstrates that you are a responsible borrower.

  4. Types of credit used, or the different types of credit you have, such as a mortgage, credit card, and auto loan, make up 10% of your credit score. It is important to have a mix of different types of credit to show that you can handle different types of credit responsibly.

  5. New credit, or recent credit inquiries or newly opened accounts, makes up 10% of your credit score. It is important to be cautious when opening new credit accounts, as it can lower your credit score if you open too many at once.


Learn more about credit scores in my blogs Credit Scores and Their Meanings or The Secrets Behind FICO Scores.


With this understanding of how your credit score is determined, you can take specific steps to improve it. One of the most important steps is to make all of your payments on time. This means paying all of your bills, including credit card bills, mortgage payments, and auto loan payments, on or before their due dates. Late payments can significantly lower your credit score and can be reported to credit bureaus for up to seven years. If you are having trouble making your payments on time, it is important to reach out to your creditors and explain your situation. They may be able to work with you to come up with a payment plan or to lower your interest rates.

Another important step is to reduce your credit utilization. This means using less of your available credit. One way to do this is to pay down credit card balances. Another way is to ask for a credit limit increase, as this will increase your available credit and lower your credit utilization. If your finances can handle it, adding additional credit cards to your report will help lower credit utilization by giving you additional credit limits, therefore decreasing your overall credit utilization. However, it is important to be cautious when opening new credit accounts. Every time you apply for credit, a hard inquiry is made on your credit report, which can lower your credit score.

In addition to paying on time and reducing credit utilization, it is important to have a long credit history. If you have recently started building credit, it is essential to be consistent and responsible with your credit use. This means paying your bills on time, not maxing out your credit cards, and not opening too many new accounts at once. If you have a limited credit history, consider getting a secured credit card. A secured credit card is a type of credit card that requires a deposit as collateral. This deposit is typically equal to your credit limit and using the card responsibly can help build your credit over time. You can find alternate ways to build credit in my blog: 4 Ways You can Build Credit Without a Credit Card or Loan.

Improving your credit score takes time and discipline, but it is possible. By paying your bills on time, reducing your credit utilization, and building a long credit history, you will likely see significant enough improvement to be eligible for financial products with lower interest rates.

Contact Boe Credit Consulting today to learn how you can have the exceptional credit you deserve.


About the Author

Jeff Boe is a graduate of National American University, a Board-Certified Credit Consultant, President of Boe Credit Consulting, and Executive Director of the Willard and Margaret Boe Financial Literacy Project. He is a credit expert who has successfully rehabilitated his own credit profile and, since 2005, has been working with consumers to improve their own credit files and their financial literacy.

In 2018 he started Boe Credit Consulting in order to help even more consumers improve their financial literacy and to help them eliminate the financial burden of negative credit.

For more information, visit

©2020 Boe Credit Consulting / Willard and Margaret Boe Financial Literacy Project


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