Improving Your Credit Score

This week, Maggie outlines the immediate steps you can take to improve your credit score.

Want to improve your credit score? You have the power! It might take months or longer, but it’s possible. Follow the tips in this episode and you’ll see your credit score go up.

  1. Make All Payments On Time

  2. Decrease Your Debt to Credit Ratio

  3. Dispute Errors On Your Credit Report

  4. Ask Creditors to Remove Marks From Your Credit Report

  5. Don’t Apply For Unnecessary New Accounts

Related Links:

To learn more about Maggie and her coaching and speaking services, visit

To get more involved with Money Circle:

The theme music is called Escaping Light by Aaron Sprinkle. The podcast artwork design is by Maggie’s dear husband, Dan Rader.


Maggie Germano: 00:00 Hey there and welcome to the money circle podcast. My name is Maggie Germano and I am your host. Don’t forget to rate, review and subscribe in your podcasting app so that more people hear about the money circle podcast and listen. This week’s episode is brought to you by Stitcher premium. Listen to some of your favorite shows. Ad-free was Stitcher premium like Conan O’Brien needs a friend, my favorite murder and more. Plus you can get access to Stitcher originals like the neighborhood listen and groceries sit. Your premium is only four 99 a month or 34 99 a year, but if you use the code money circle one word, you can get your first month for free. Go to to sign up today. This week I’m talking about how you can improve your credit score. If you’re an adult living in the modern world, you’ve most likely heard of your credit score.

Maggie Germano: 00:58 There are many companies out there that offer your credit score for free, like credit karma and credit Sesame. You might even be lucky enough to have your bank offer that to you for free, but you might not understand why your credit score matters at all. Basically, you should care about your credit score if you care about your future. To put it simply in a lender’s eyes, the higher your credit score, the lower risk you are to them. Depending on your credit score, the lender can decide if they consider you eligible for a loan and it can impact the interest rates on those loans. If your credit score is high, you can look out and get a lower interest rate which will save you hundreds if not thousands of dollars in the long run. If your credit score is low, lenders might not consider you eligible for loans at all, or if they do approve you, they might give you a high interest rate or other added fees which will cost you lots of money over time.

Maggie Germano: 01:48 Luckily, no matter how low your credit score is right now, there are ways that you can start to improve it. It might take a year or two depending on where you’re starting from, but it is possible. Here are some ways to get started. The first and most important step is to make sure that you’re making all of your payments on time. So whether that is a student loan or a credit card or a personal loan or a mortgage or a car loan, whatever kind of account you have, that is a credit account, it’s very important for you to make the payments for that on time late or miss payments show your creditors and the credit bureaus that you’re not necessarily trustworthy with the credit that they’ve given to you and your trustworthiness and reliability is one of the main ways to convince lenders to loan you more money in the future and give you good rates.

Maggie Germano: 02:39 If you struggle with making payments on time, set up auto pay so that you never miss another payment. Next is to decrease your debt to credit ratio. So what that means is how much money you’re actually spending out of the amount of credit that is available to you. So say you only have one credit card with a limit of $1,000 but every month you end up with a remaining balance of at least $750 that means that your credit card utilization is typically at 75% lenders want to see you keep that utilization rate at or below 30% so the ideal balance there, if you had that limit of $1,000 would be $300 if you’re paying your amounts off every month, it won’t hurt you as much, but if you’re using up most of the credit that’s available to you, it will hurt your credit score over time.

Maggie Germano: 03:29 There are two ways to improve this ratio. First, and most importantly, you should pay down your balances. This is going to help you the most over time, both in terms of your credit score and in terms of how much debt you actually have to worry about. So setting up some kind of plan to be paying down your balances, whether that is doing a balance transfer, getting a consolidation loan so that you’re actually able to make progress on those debts. The other way to improve this ratio is to increase the amount of credit available to you. This would look like calling your credit card company and asking them to increase your credit limit. Of course, if you do this, you need to be certain that you won’t increase the amount of spending that you’re putting on that card. If you’re worried you’ll overspend, cut up or lock up your cards so that you won’t be able to use them at all.

Maggie Germano: 04:16 You might have gotten emails or letters in the past from your credit card company telling you that they’re increasing your credit limit and you might be wondering why on earth they would do that to you. And it can be kind of a double edged sword sometimes where you are increasing the amount of credit credit available to you, but it can get you into a cycle of spending more than you can actually afford to pay off. So even if you are getting these credit increases already, make sure you’re still only spending what you can afford. Next step to improve your credit score would be to dispute errors on your credit report. So the first thing you need to do is pull your credit [email protected] which is actually free, unlike free credit by law, each of the three credit bureaus are actually required to provide one copy of your credit report each year for free.

Maggie Germano: 05:10 I like to actually put it in my calendar so that I’m pulling my credit report from a different credit Bureau every four months. So it works out to be that I’m getting the one free credit report each year from each uh, credit Bureau. Once you’ve done that, you should review your report and check every item that is on it. You’ll see all of your opening closed accounts such as student loans, car loans, and credit cards. Each of these accounts will show if you’re in good standing with them, what the last report of balance was and if you had any late payments. So if you keep going down the report, you’ll find any items that might have been sent to collections, any liens that were put on your report, and things like bankruptcy filings. It’s really important to look at all of these details because you’ll be able to see if is opening accounts in your name, which would be identity theft or if a creditor has erroneously reported something negative to the credit Bureau.

Maggie Germano: 06:06 If you find anything that doesn’t belong there, contact the creditor directly and then file dispute with the credit Bureau. This process can take a little bit longer than you might like and is kind of frustrating for sure, but it’s better to dispute any errors that are hurting you. Then to just let it be next, and this is related is asking creditors to remove marks from your credit report, so a negative Mark on your credit report is going to hurt your ability to qualify for credit or obtain desirable interest rates in the future. As I said before, examples of these negative marks are things like bankruptcy, foreclosure collections, late payments, or a tax lien depending on the market can take up to seven years for these to be removed from your credit report. That’s a long time. So if you’ve taken care of something like an item in collections, say you paid it and took care of it, you can call the collections agency and ask them to contact the credit bureaus and have the item removed from your report.

Maggie Germano: 07:06 They won’t necessarily agree to this. I wouldn’t rely on this to be something that actually happens, but like I have said before it, Oh, it’s always worth asking. It’s always worth taking the extra step to try to get yourself in a better position. The worst they can say is no. Last but not least, don’t apply for any unnecessary new accounts. So let’s get something clear first. It’s not true that checking your credit score or pulling your credit report hurts your credit score. However, it is true that applying for new credit might negatively impact your credit score when a potential lender is reviewing your credit because you’ve applied for credit with them, they will do a what is called a hard inquiry. These include credit checks when you’ve applied for an auto loan, mortgage, personal loan or a credit card that doesn’t include when you’re getting unsolicited credit card offerings in the mail.

Maggie Germano: 08:00 Those are called soft polls. That’s going to show up on your credit report, but it’s not going to hurt you because you are not requesting that. When you have many different hard polls in a short period of time, credit bureaus start to get a little bit suspicious. They wonder why you’re applying for so much credit, so this uncertainty can ding your credit score, which is why it’s important not to apply for things unless you absolutely need them at least while you’re trying to get that score up, and this is especially true if you’re in a moment where you’re trying to get approved for something really important. For example, when my husband and I were waiting to close on our house, we had to completely freeze doing anything that might impact our credit so we couldn’t try to refinance anything. We couldn’t apply for credit cards, we couldn’t apply for a car loan.

Maggie Germano: 08:52 We had to kind of pause and not do anything with our money so that the underwriters at the lender wouldn’t get suspicious and ask questions and um, decide to kind of turn us down. So those are the moments where it’s very important not to make any moves with your credit, but when you want to see your credit go up and up and up and really see improvement there, it also can be helpful to not take any other action with the credit. However, maybe your credit score is lower than you’d like because you don’t have any credit history or any accounts. That’s a scenario where applying for credit will actually help you in the long run. You should start with a secured credit card from your bank. This type of card will be more likely to have a lower limit, but it’s a good way to get started building credit without risking getting into debt.

Maggie Germano: 09:43 It’s also the kind of card that you’ll be more likely to be approved for, even if you don’t have a credit history, because you might have to put up some cash as collateral for that account. And so if you were to miss a payment, your bank could pull from that collateral that you put up in order to pay themselves back. So that is a really good place to start, especially as you’re starting to grow your credit and increase your credit score and really set yourself up for, um, credit success in the future. And so if you follow these steps, your credit score will most likely and most definitely go up over time. It’s not going to happen overnight, but be patient and keep taking the right actions. Good luck.

Maggie Germano: 10:31 Thanks so much for listening to the money circle podcast. If you’d like to get more connected with money circle or with me, there are lots of ways you can do that. To join the free Facebook group, visit circle group to stay informed of any upcoming events. Subscribe to my weekly [email protected] slash subscribe if you’d like to join the virtual money circle membership group, visit Maggie to learn more about my financial coaching and services, my speaking and workshop offerings, or just to read my Bob, visit Maggie you can also follow me on Instagram and Twitter at Maggie Germano. Thanks again for listening.