Having trouble learning how to raise your credit score while you’re in debt? You have come to the right place.

We are going to be discussing simple, affordable, and doable ways to raise your credit score while you are also in debt.

It may seem like an impossible task, but there are definitely ways you can do it without paying off all your debt at once.

You don’t even necessarily have to follow all these tips, as any step in the right direction will help you raise your credit score. First, let’s talk about what could be causing your low score.

Why Is Your Credit Score Low?

Oftentimes, a low credit score can be the result of having errors on your credit report or simply not noticing where there are issues to be fixed. There are many, many different aspects to consider when looking at your credit reports – here are some examples of what you should look out for.

Errors on Your Credit Report

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If you have some old collections accounts from years ago that is past the statute of limitations in your state, sometimes, that will still be reported and show up on your credit report. This is something that you are able to bring up and dispute if it is an issue.

If you have a loan you have defaulted on, sometimes, they can show up as multiple defaults on your credit report. This is typically because it has been sold to debt collectors.

Another error that can sometimes occur seems ridiculous and rather simple, but it does happen. Your credit information can sometimes be mixed up with someone who has the same or a similar name to you. Check your report religiously to monitor for any incorrect information.

Unpaid debts can have a huge effect on your credit score as well, especially if you aren’t aware of them. If you have dealt with a previous divorce where your partner was responsible for a debt they didn’t pay, that could be causing issues with your overall score.

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Other Reasons Your Credit Score Is Low

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If you have checked your credit report for errors and come up with nothing, you should consider other reasons your credit score is low.

The amount of debt you have makes a considerable difference when it comes to your score. Debt actually contributes about 30% to your FICO score calculation. Creditors will see maxed out credit cards and large amounts of loan debt and worry about allowing you to take on even more debt. This is definitely the aspect you should focus on fixing first, as it is much easier to deal with than your
payment history.

However, you should also consider payment history when trying to figure out what is making your credit score low. If you have a previous history of making payments late, creditors are going to see you as a bigger risk for future credit and this has the most effect on your current score.

Having a mixture of different types of accounts (loans, credit cards, etc) helps keep your score higher than if you just had experience with one.

Lastly, having only newer accounts and a long history of credit applications will also stop your credit score from rising.

So now that you know what the issues with your score could be, let’s talk about how to raise your credit score.

Pay Any Late Payments

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One surefire way to work on how to raise your credit score is by paying any late payments you may have on your plate. While this isn’t necessarily the fastest way to bring up your score, it’s one of the most efficient.

To get started, set up due date alerts for all of your payments for debt, including credit cards, loans, etc. Make sure you have them all marked on your calendar and you have them paid before they are considered late.

If you are dealing with significantly late payments, try asking your lender or credit card issuer if they are able to forgive one of them. Typically, if you have a long record of paying that bill on time, the credit card company may be more forgiving.

While they may not seem like that big of a deal at the time, delinquent payments can stick to (and cause significant damage to) your credit for up to 7 years from the date that the credit bureau reported on the late payment. This date is also known as the original delinquency date.

The payment will not be considered late by the credit bureau until it is at least 30 days past due. Keep in mind, however, that this doesn’t mean you won’t be charged a penalty or late fee by the lender before that point.

Open a Secured Credit Card

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If you don’t have enough accounts open to raise your credit score, then you may want to consider a secured credit card.

This is a credit card where you make a deposit into a checking account that essentially “secures” the line of credit the lender is giving you. As an example, you can open the checking account, put $500 in it, and then get a line of credit for $500.00. This is less risky than a regular credit card, as you are borrowing against your own money.

You can usually get a secured credit card with bad credit, and the addition of a new account with a good payment history will do wonders for your overall credit score.

The reason that this card is less risky than a typical credit card, is that if you are defaulting on the payments, the initial deposit you made will be used to cover the balance on the card.

Remedy Your Credit Utilization Ratio

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Your credit utilization ratio refers to how much credit you have available to you against how much of it you have to pay off. If your credit card balances each month are higher than 30%, it’s going to cause your credit score to go down. This is true even if you pay off your balances in full each month by the due date because the statement balance is most likely what is being reported to the credit bureaus.

The debt to credit ratio is one of the top factors that determine consumer credit. This is the reason that it’s not recommended that you close your unused credit card accounts – keeping them open keeps your credit amount high without affecting the amount of debt you have.

If you want to close a consumer credit account, you will want to make sure that you can keep up with a 15% utilization percentage without that card being used. If that isn’t an option, you should
consider replacing that card to keep your good credit utilization ratio.

Pay for Everything in Cash

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If your credit cards are the issue, consider making all of your purchases in cash. Doing this while also making regular payments on the card will lower your utilization rate and the amount of debt you have to deal with.

For those of you who are struggling with not using their credit cards, consider chopping up the physical card with scissors or leaving them at home when you go shopping. Once you find a method that helps you stop using the card, it should be easier to break the habit altogether.

Have Your Landlord Report Your Rent Payments

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While rent payments are not a regular part of your credit history, you can ask your landlord or your property management company to begin reporting them.

To do this you may have to start making payments through a third-party agency that reports rent payments, and these companies may charge a fee to process those payments. In some cases, you may be required to pay the fee, and in others, your landlord may cover it.

When the rent payments are added to your credit report, there are some credit scores that will take them into account.

Our Final Thoughts on How to Raise Your Credit Score

No matter what your issues with your credit are, we hope you found our tips on how to raise your credit score helpful. Any positive steps are sure to make a difference, as long as you know where the issues are coming from.

What tips are you the most excited to try for your own credit score?