FICO scores range from 300 to 850, and a credit score below 580 is poor. The average FICO score in the U.S. is 718, and if yours is on the lower end, it’s still possible to repair your credit through strategies like on-time payments and paying down debts. 

While credit score repair takes time, there are several strategies you can implement to start reaping the benefits of good credit. In this guide, we’ll talk about the factors that impact your credit score and credit repair tips you can implement to improve yours.

What Is a Credit Score?

A credit score is a rating that tells a loan provider how financially responsible you are. Higher credit scores indicate that you pay bills on time and borrow money responsibly. Lower credit scores indicate that you may be a riskier borrower because you max out your credit cards or miss payments.

Experian, Equifax, and TransUnion are the three major credit bureaus that gather data about your credit habits and calculate a score based on it. Some lenders may review your credit report from a single credit bureau, while others will order a tri-merge credit report that merges data from all three to assess your creditworthiness.

Why Is a Good Credit Score Important?

A good credit score can help you save a considerable amount of money in interest charges. A higher credit score indicates lower risk for the lender, so they’ll be willing to offer you the lowest interest rates available. Borrowers with the best credit scores typically get the best terms.

When you have fair credit or bad credit, it may be difficult for you to qualify for loans or even lease an apartment. If you do qualify, you’ll pay higher interest rates that can add up to hundreds of dollars over the life of the loan.

The 5 Factors That Contribute to Your Credit Score

Credit scoring systems like VantageScore and FICO Score use several factors to determine your credit score.

1. Payment History

Your payment history accounts for 35% of your credit score. Paying your bills on time has the single largest impact on your credit. When your credit history reflects missed payments, charge-offs, collections, or late payments, there can be lasting consequences.

2. Credit Utilization Ratio

Your credit utilization ratio is the percentage of the total borrowing limit you’re using on revolving accounts like credit cards. This accounts for 30% of your credit score. 

“The biggest impact you can control and make to your credit score besides making on-time payments is decreasing what you owe,” says Teresa Dodson, a debt expert and the founder of Greenbacks Consulting. “Keep your utilization rate under 30%. Anything over 50% will begin to hurt your score,” cautions Dodson.

3. Length of Credit History

Your credit score tends to be higher the longer your credit history. Credit scoring systems measure the age of your oldest accounts, newest account, and the average age of all accounts. The length of your credit history accounts for 15% of your credit score.

4. Types of Credit

Your ability to manage multiple types of debts impacts your credit score. When you use a healthy mix of revolving accounts and installment debt, such as personal loans and car loans, your credit score improves. Your credit mix accounts for 10% of your credit score.

5. New Credit Inquiries

Whenever you apply for a new loan, there’ll be a hard inquiry, which can ding your credit score. While the ding is quite small, if you apply for multiple products within a short period of time, your credit score may suffer. New credit inquiries account for 10% of your credit score.

7 Steps to Repair Your Credit Score

There’s no quick fix for credit score repair. You can either pay for professional credit repair services or follow the steps we’ve listed here to improve your credit score over time.

1. Create a Budget and Stick To It

Repairing your credit score involves paying down debts, which requires freeing up money to do so. Before you start the process, it's best to create a budget to determine how much you’ll be able to allocate each month for debt repayment.

A budget will also give you a clear idea of your income and expenses so you can ensure that you’re paying all bills on time to improve your credit score.

2. Find and Dispute Errors on Your Credit Report

Get a free copy of your credit report from all three credit bureaus and review them to check your current credit score. Check all the information on your file to spot any inaccuracies that may be lowering your score.

If there are any inaccurate negative items on your credit report, you can send a credit dispute letter. Once you file a dispute, credit reporting agencies have to investigate it within 30 days and correct any incorrect information.

3. Pay Off Outstanding Debts

If you have a lot of outstanding debts, consider paying them off to improve your repayment history and lower your credit utilization ratio. Make a list of all your debts and focus on paying off high-interest debts, such as credit card debt.

Consider the debt avalanche method, where you focus on paying off debts with the highest interest rate first. Another option is the debt snowball method, where you repay your smallest balances first. You can also apply for a debt consolidation loan or enroll in a debt management plan to pay off your debts.

4. Negotiate Payment Plans With Creditors

If you have debts that you can’t pay, speak to your lenders to check if they offer any hardship options or monthly payment plans that make it easier for you to repay debts.

If your debts are three to six months past due or collection accounts and you don’t think you can pay off the entire amount, consider sending a debt settlement letter to your lenders to negotiate a settlement.

5. Establish a Positive Payment History

Once all your credit accounts are current, build credit through on-time payments. You can set up autopay so you never miss a payment. Keep in mind that if your account doesn’t have enough money to cover all the payments, you may have to pay overdrafts and insufficient fund penalties.  

6. Reduce Credit Utilization

Another effective credit score repair strategy is to reduce your credit utilization ratio, which should ideally be below 30%.

Divide your credit card balance by your total available credit limit to calculate your utilization rate. If it’s over 30%, pay down the balance to improve your credit score.

7. Monitor Your Credit Score Regularly

Once you take these steps to improve your credit score, we recommend getting free credit reports from and checking them regularly to see how you’re progressing. Regularly monitoring your credit report will help you to catch errors as soon as possible and see how the steps you take impact your credit score.

Are Credit Score Repair Services Worth It?

Credit repair companies help consumers with poor credit by disputing any negative information with credit bureaus. They also use other strategies to improve your credit score, such as credit monitoring, identity theft protection, negotiating with lenders, and creating credit improvement plans.

You’ll typically pay an upfront fee and a monthly fee of $99 to $149 for this service. There’s nothing a credit repair company can do to fix your credit score that you can’t do yourself. However, if you have complex issues and don’t have the time to resolve them on your own, you can seek professional assistance from a reputable credit repair company.

The Federal Trade Commission (FTC) warns consumers to be aware of credit repair scams and avoid anyone who guarantees results or promises to remove accurate negative information from credit reports.

Fix Your Credit Score

Credit score repair takes time and consistent effort, but you’ll see results if you continue working on it. Monitor your credit report, get a secured credit card, pay your bills on time, and dispute any errors to improve your credit. Once you have better credit, continue to monitor your credit score.

We also recommend fixing any bad spending habits and learning healthy money management practices to avoid falling back into the same patterns. Consider nonprofit credit counseling if you need additional help. A credit counselor can review your budget, debt, and credit report and provide you with resources to get your debt and credit issues under control.