14 Ways to Improve Your Credit Score

Jamia Kenan (apartments.com) • February 2, 2021

Credit is one of the most important factors in your financial life, so having a high credit score has its advantages. Although you can rent an apartment with a low credit score, working towards a higher score will help you in the long run. There are some key concepts you should know about credit to help you increase your score. Here are some tips to help you earn a higher score so you can be accepted to the apartment of your dreams. 

WHAT IS A CREDIT SCORE? 

A credit score is a three-digit number on a scale between 300 and 850, with 850 being the best score. Banks, credit card companies, and other entities that you conduct business with use credit scores to determine the likelihood a person will pay back a loan or pay a bill. When property managers or landlords screen tenants, they use credit scores to help them determine if someone will be a reliable tenant who pays rent on time. The higher your score, the more likely you are to qualify for loans, credit cards, and lower interest rates, along with several other advantages. 

Typically, a minimum score of 600 or above is required for most apartment communities. However, if you have a lower score, don’t worry! What is considered a “good score” varies depending on where you apply for an apartment. Paying a larger security deposit, getting a cosigner, and providing references can help you secure an apartment if you have a low credit score or zero credit. 

HOW ARE CREDIT SCORES CALCULATED? 

There are three federal credit bureaus that calculate and report credit scores: Equifax, Experian, and TransUnion. Each bureau has its own algorithm used to compute scores, so you actually have three separate credit scores. Each company uses similar factors to calculate a score, but the degree of how much each factor affects your score varies. Here are some factors that are used to calculate a credit score: 

  • Payment history on loans, credit cards, and other bills 
  • Credit utilization ratio (how much debt you owe compared to your amount of available credit) 
  • Credit mix (types of credit accounts you have) 
  • Credit age (how long you have had accounts open) 
  • How often you apply for new credit 

Since calculating credit scores is complex, it’s good to understand which financial habits will positively or negatively impact your credit. For example, paying bills on time and keeping a low credit card balance can help lead to a higher credit score. 

TIPS TO IMPROVE YOUR CREDIT SCORE 

Improving credit takes time. It can take months or years to get your desired score, but there are small steps you can take that will help you in the long run: 

1. Check your credit scores online 


Begin by checking your current credit score online. You can use a free credit score service or purchase scores from the three bureaus. Some banks also provide customers with credit scores, which are listed on bank statements or an online portal. When you receive your scores, you’ll also get information about which factors are impacting your score the most. Recognizing the factors will help you develop a plan and determine what changes need to be made. 

2. Check credit reports and dispute errors 


A credit report is a record of your credit history. The report details how and when you pay your bills, the amount of debt you owe, and how long you have been managing credit accounts. Since credit reports are used to compute credit scores, it’s important to review them for inaccuracies that will drag your credit score down. 

Get credit reports from all three credit agencies so you know where you stand across the board. Verify that the information from each account is correct. If you find an error, dispute the issue with each agency to ensure the change is made everywhere. Requesting a credit report won’t negatively impact your score if you order directly from the credit bureaus. You can also use an authorized company that can provide credit reports to consumers like AnnualCreditReport.com, which is jointly operated by TransUnion, Equifax, and Experian. Federal law requires each of the credit bureaus to give a free credit report every 12 months if requested. From now until April 2021, you can order free weekly credit reports on AnnualCreditReport.com. Try to make a habit of monitoring your credit regularly so you can spot errors before they can drag your score down. 

3. Pay bills on time 


Past payment history is one of the biggest factors used when calculating credit scores and is seen as one of the best predictors of future financial behavior. Paying a bill late or settling a loan account for a lower amount than you initially agreed will negatively impact your credit. Late and missed payments can be viewed on your credit report for seven years. Even if you finish paying off a collection, the account will not be removed from your report for seven years. Paying just a few days late can do some damage to your score as well. All bills including rent, utilities, loans, and credit card bills should be paid on time, all the time for your credit score to increase. Landlords are interested in finding reliable tenants who will pay on time, so keep that in mind. 

You can use calendar reminders or automatic payments to help make sure bills are paid on time every month. If possible, charge all your monthly bill payments to a credit card. This strategy simplifies paying bills and will help improve your score because you’ll be using a credit account that is managed appropriately. Remember to pay the balance in full each month to avoid interest charges. 

If you don’t have the best payment history, don’t fret! Older late payments will have less effect on your score than more recent bills. If you’re behind on payments, work to bring those accounts current gradually over time. The sooner the debt is paid, the sooner your score can increase. In some circumstances, if you miss a payment by 30 days or more, you can contact the creditor and set up a payment arrangement and ask for the missed payment to not be reported to the credit bureau. If you are struggling, seek financial assistance from a credible source. 

4. Pay off debt and keep credit balances low 


This is where the credit utilization ratio comes into play. Credit utilization is the amount of overall used credit compared to the amount of available credit. Credit utilization is another large factor in credit score calculations. A lower ratio is an indicator that a person knows how to successfully manage credit and doesn’t max out credit cards. Essentially, you want to keep all of your credit balances low because a high outstanding balance can negatively impact your score. 

It’s recommended to keep your balance at 30 percent or less of your total line of credit, especially if you find you can’t always pay your bill in full each month. If you want to help your utilization ratio and increase your credit score even more, work towards having 10 percent or less. To calculate the credit utilization ratio, total debt is divided by total available credit. Here’s an example using a single credit card: 

You have a credit card with a $7000 credit limit and a $3,000 balance. 

3000/7000 = .428, or 43% 

With this credit card, your credit utilization ratio is too high. You would need to pay more than the balance to be on track, or have other credit cards that allow for your overall credit utilization ratio to be lower. Try to keep your balances low, try only using credit cards for smaller items that you know you will be able to pay off each month. 

5. Work towards a good mix of credit 


Credit mix is another common factor used to calculate a credit score. Managing different kinds of credit accounts shows you can manage different types of debt at the same time. If you don’t have a diverse credit portfolio, don’t go out and apply for more credit. Having a less diverse portfolio will not make your scores go down but obtaining more types of credit over time (along with paying each account on time) will help increase your score. 

The goal is to strike a balance between revolving credit and installment credit. Installment credit includes a loan where you agree to borrow a set amount and you agree to pay a monthly payment until the debt is paid off. Mortgages, student loans, personal loans, and auto loans are examples of installment credit. 

Unlike installment credit, revolving credit does not have a set end date or balance. Revolving credit requires a minimum payment every month. Customers can pay more than the minimum, but it’s not required. Credit cards like bank cards and retail cards are the most common types of revolving credit. 

Whether you have a good credit mix or not, consider what debt you already have and create a plan that works best for you. If you only have credit cards, it might help to get a small loan, but if you just applied for something that required a hard inquiry, it might be best to wait it out. 

6. Don’t close unused credit cards or accounts 


Even if you don’t use a credit card or account anymore, keep it open. Credit history length is an important factor when calculating scores. Remember the older the credit age, the better the score. Closing an account could also increase your credit utilization ratio. If you close an account, the amount of available credit will lower, raising your utilization ratio, and increasing your credit score. 

As long as you’re not paying too much in annual fees, keeping an old credit card open is a great strategy to build your score. Make sure to use the card every now and then, just so the company won’t close the account. If you have delinquent accounts or collection accounts, before you apply for new credit, work towards paying the past due amount, and then try to pay on time in the future. These negative accounts will not erase from your report, but it will help in the long run. 

7. Apply for new credit only as needed 


Although it is good to have a diverse credit portfolio, avoid opening too many accounts in a short amount of time just to have a better mix of credit. A quick buildup of credit accounts can look risky, especially for new credit users. When applying for a new line of credit, a hard inquiry is required. A hard inquiry, also called a “hard pull,” will be listed as a negative change in your credit report. Although it fades over time, too many hard inquiries could lower your score. Unnecessary credit could also tempt you to overspend and gain more debt, harming your score. 

Hard inquiries can stay on your credit report for two years, so it’s important that you know your credit score before applying to apartments. Property managers and landlords use hard and soft inquiries, depending on their leasing process. 

8. Consider getting a secured credit card 


Managing a credit card properly is a great way to build up your credit.  Someone with zero credit history is seen as a higher risk than a credit user who has managed their account responsibly. A secured card is just like a regular credit card, but the card is backed by a deposit that is paid upfront. The deposit amount is typically the same as your credit limit. You make payments monthly like with a regular card, but if you fail to pay the bill, the credit company could keep your deposit. Try to find a secured card that reports to all three bureaus so you can ensure your score goes up everywhere. Whether shopping for a secured card or a traditional credit card, be sure to pay attention to the interest rates and any fine print. 

Keep in mind that although a new credit card can increase your credit mix and lower your utilization rate, the application will also result in a hard inquiry on your credit report. Beware that your score might look like it decreased, but over time it will move back up. 

9. Become an authorized user 


Becoming an authorized user is a great strategy for people who have zero or little credit history. Having someone with great credit add you as an authorized user will add to your credit file, lengthen your credit history, and lower your utilization ratio. If you’re too timid to ask a relative or close friend to add you as an authorized user, note that the account holder doesn’t have to let you use the line of credit regularly or give you access to the account. 

10. Ask for a credit increase 


If you love to shop, don’t use this method! Raising your credit limit on one or more of your credit cards will lower your utilization score, as long as your balances don’t increase as well. The higher the limit, the lower the ratio. If you have missed payments, asking for a credit increase isn’t recommended. The credit card company could see it as a sign of a financial crisis, which will hurt your score. 

11. Find out the reporting date 


You can pay off your balance each month, but if the payment is received after the credit card company reports to the bureaus, your balance could appear as high, which will harm your utilization ratio and negatively impact your score. Ask the company the deadline for reporting and pay the bill before the closing date, so your balance can appear low and ultimately boost your score. 

12. Use a credit monitoring service 


There are several credit monitoring services you can use to keep an eye on your credit. A credit monitoring service will alert you to any changes in your credit report and provide a monthly credit score from at least one federal credit agency. Some banks provide all customers with credit monitoring, but there are also services that are free or charge a small fee. Credit monitoring can also help prevent identity theft and fraud. If you see an unfamiliar new credit account opening, you can report the fraud. 

13. Avoid making large purchases 


This tip might seem like a no-brainer but buying expensive items with a credit card is a mistake many people make. If you make a purchase with your credit card that you won’t be able to pay back at the end of the month, the interest will pile up quickly, placing you further in debt. Remember one of the main methods to improve credit is paying the bill on time (or before the reporting period). If you plan to carry a balance each month, avoid using your credit card. If an emergency arises and you must use your card, split the bill and make two payments that month, if possible. 

14. Seek financial advice if you’re having trouble improving your credit 


If you’re struggling with improving your credit score, there is help available. Seeking assistance will not negatively impact your score. Start by contacting your credit card company. Some credit card companies have credit card hardship programs and will lower the interest rate or waive fees for customers. 

Consider reaching out to a credit counselor. There are multiple credible credit counseling services out there. Some are non-profits and are free to use, but there are also services that charge a small fee. A credit counselor can help develop a Debt Management Plan (DMP) and negotiate to reduce monthly payments. You can learn more about finding a credible credit counselor from the National Foundation for Credit Counseling. 

WHEN WILL MY CREDIT SCORE IMPROVE? 

Since credit is complex and various risk factors impact credit reports and scores, you can’t accurately assume the exact time your score will increase. The time required to build your credit depends on the negative information listed on your credit report including hard inquiries, late payments, collections, and bankruptcy. Hard inquiries will stay on your report for two years while other items like delinquency will be listed for seven years. Bankruptcy will remain for 10 years. Essentially there is no shortcut for improving credit. Beware of anyone who claims they can improve your credit in a very short amount of time! 

Improving credit might seem overwhelming, but it doesn’t have to be. If you need help, don’t hesitate to set up an appointment with a credit counselor. Continue learning about the risk factors and identify which ones are negatively impacting your score so you can take appropriate action. Have patience and practice good credit management and your credit scores will improve over time. 


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The Five-Year Rule for Home Price Perspective

By KCM • June 25, 2025
The Five-Year Rule for Home Price Perspective Headlines are saying home prices are starting to dip in some markets. And if you’re beginning to second guess your plans based on what you’re hearing in the media, here’s what you need to know. It's true that a few metros are seeing slight price drops. But don't let that overshadow this simple truth. Home values almost always go up over time (see graph below): While everyone remembers what happened around the housing crash of 2008, that was the exception – not the rule. It hadn’t happened before, and hasn’t since. There were many market dynamics that were drastically different back then, too. From relaxed lending standards to a lack of homeowner equity, and even a large oversupply of homes, it was very different from where the national housing market is today. So, every headline about prices slowing down, normalizing, or even dipping doesn’t need to trigger fear that another big crash is coming. Here’s something that explains why short-term dips usually aren’t a long-term deal-breaker. What’s the Five-Year Rule? In real estate, you might hear talk about the five-year rule. The idea is that if you plan to own your home for at least five years, short-term dips in prices usually don’t hurt you much. That’s because home values almost always go up in the long run. Even if prices drop a bit for a year or two, they tend to bounce back (and then some) over time. Take it from Lance Lambert, Co-Founder of ResiClub: “. . . there’s the ‘five-year rule of thumb’ in real estate—which suggests that most buyers can buffer themselves from mild short-term declines if they plan to own a property for at least that amount of time.” What’s Happening in Today’s Market? Here’s something else to put your mind at ease. Right now, most housing markets are still seeing home prices rise – just not as fast as they were a few years ago. But in the major metros where prices are starting to cool off a little (the red bars in the graph below), the average drop is only about -2.9% since April 2024. That’s not a major decline like we saw back in 2008. And when you look at the graph below, it’s clear that prices in most of those markets are up significantly compared to where they were five years ago (the blue bars). So, those homeowners are still ahead if they’ve been in their house for a few years or more (see graph below): The Big Picture Over the past 5 years, home prices have risen a staggering 55% , according to the Federal Housing Finance Agency (FHFA). So, a small short-term dip isn’t a significant loss. Even if your city is one where they’re down 2% or so, you’re still up far more than that. And if you break those 5-year gains down even further, using data from the FHFA, you’ll see home values are up in every single state over the last five years (see map below): That’s why it’s important not to stress too much about what’s happening this month, or even this year. If you’re in it for the long haul (and most homeowners are) your home is likely to grow in value over time. Bottom Line Yes, prices can shift in the short term. But history shows that home values almost always go up – especially if you live there for at least five years. So, whether you’re thinking of buying or selling, remember the five-year rule, and take comfort in the long view. When you think about where you want to be in five years, how does owning a home fit into that picture? Let’s connect to get you there.

Newly Built Homes May Be Less Expensive Than You Think

By KCM • June 25, 2025
Newly Built Homes May Be Less Expensive Than You Think Do you think a brand-new home means a bigger price tag? Think again. Right now, something unique is happening in the housing market. According to the Census and the National Association of Realtors (NAR), the median price of newly built homes is actually lower than the median price for existing homes (ones that have already been lived in): You read that right. That brand new, never-been-lived-in house may cost less than the one built 20 years ago in a neighborhood just down the street. So, if you wrote off a new build because you assumed they’d be financially out of reach, here’s what you should know. You could be missing out on some of the best options in today’s housing market. Why Are Newly Built Homes Less Expensive Right Now? 1. Builders Are Building Smaller Homes Builders know that buyers are struggling with affordability today. So, instead of building big houses that may not sell, they’re building smaller ones that will. According to the Census, the average size of a newly built single-family home has dropped considerably over the past few years (see graph below): And as size goes down, the price often does too. Smaller homes use fewer materials, which makes them less expensive to build. That helps builders keep prices lower so more people can afford them. 2. Builders Are Offering Price Cuts and Incentives In May, according to the National Association of Home Builders (NAHB), 34% of builders lowered their prices, with an average price drop of 5% . That’s because they want to be sure they’re selling the inventory they have before they build more. On top of that, 61% of builders also offered sales incentives – like helping with closing costs or buying down your mortgage rate. These are all ways builders are making their homes more affordable, so these homes sell in today’s market. Your Next Step? Ask Your Agent What's Available Near You If you're trying to buy a home right now, be sure to talk to your agent to find out what builders are doing in and around your area. They can find new home communities, as well as builders who are offering incentives or discounts, and hidden gems you might not uncover on your own. Plus, buying a newly built home often means there are different steps in the process than if you purchase a home that’s been lived in before. That’s why it’s so important to have your own agent who can explain the fine print. You want a pro in your corner to advocate for you, negotiate on your behalf, and make sure your best interests come first. Bottom Line You could get a home that’s brand new, with modern features, at a price that’s even lower than some older homes. Let’s talk about what you’re looking for and see if a newly built home is the right fit for you. If buying a home is on your to-do list, what would stop you from exploring newly built options?

Why Would I Move with a 3% Mortgage Rate?

By KCM • June 18, 2025
Why Would I Move with a 3% Mortgage Rate? If you have a 3% mortgage rate, you’re probably pretty hesitant to let that go. And even if you’ve toyed with the idea of moving, this nagging thought may be holding you back: “why would I give that up?” But when you ask that question, you may be putting your needs on the back burner without realizing it. Most people don’t move because of their mortgage rate. They move because they want or need to. So, let’s flip the script and ask this instead: What are the chances you’ll still be in your current house 5 years from now? Think about your life for a moment. Picture what the next few years will hold. Are you planning on growing your family? Do you have adult children about to move out? Is retirement on the horizon? Are you already bursting at the seams? If nothing’s going to change, and you love where you are, staying put might make perfect sense. But if there’s even a slight chance a move is coming, even if it’s not immediate, it’s worth thinking about your timeline. Because even a year or two can make a big difference in what your next home might cost you. What the Experts Say About Home Prices over the Next 5 Years Each quarter, Fannie Mae asks more than 100 housing market experts to weigh in on where they project home prices are headed. And the consensus is clear. Home prices are expected to rise through at least 2029 (see graph below): While those projections aren’t calling for big increases each year, it's still an increase. And sure, some markets may see flatter prices or slower growth, or even slight dips in the short term. But look further out. In the long run, prices almost always rise. And over the next 5 years, the anticipated increase – however slight – will add up fast. Here’s an example. Let's say you'll be looking to buy a roughly $400,000 house when you move. If you wait and move 5 years from now, based on these expert projections, it could cost nearly $80,000 more than it would now (see graph below): That means the longer you wait, the more your future home will cost you. If you know a move is likely in your future, it may make sense to really think about your timeline. You certainly don't have to move now. But financially, it may still be worth having a conversation about your options before prices inch higher. Because while rates are expected to come down, it’s not by much. And if you’re holding out in hopes we’ll see the return of 3% rates, experts agree it’s just not in the cards (see graph below): So, the question really isn’t: “why would I move?” It’s: “when should I?” – because when you see the real numbers, waiting may not be the savings strategy you thought it was. And that’s the best conversation you can have with your trusted agent right now. Bottom Line Keeping that low mortgage rate is smart – until it starts holding you back. If a move is likely on the horizon for you, even if it’s a few years down the line, it’s worth thinking through the numbers now, so you can plan ahead. What other price point do you want to see these numbers for? Let’s have that conversation, so I can show you how the math adds up. That way, you can make an informed decision about your timeline.
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