The Debtor's Guide for Raising Your Credit Score in 2019

You need to raise your credit score. Here's how:

Piggybacking, error disputing, and credit utilization tracking are just a few of the great tips we have for you today.

Once you've finished this article, you'll understand why your credit report is so important, the role debt plays in determining your credit report, and some expert opinions on how to get it back up.

If your credit took a dip, debt likely played a part. Some people go to debt settlement companies to negotiate a lower debt payment with creditors and lenders. Others successfully find ways to dig themselves out of debt.

Either way, your credit score is suffering from the experience. 

Allow us to break things down for you.

Understanding Your Credit Score

Before beginning the long trek to a better credit score, you need to understand what a credit score is and exactly why a good credit score is needed.

Try taking our credit score IQ test to see how much you already know:

What Is a Credit Score?

Your credit score often called your FICO score is a three-digit number ranging from 300 to 850 that measures your credit habits. This includes how much you spend, how quickly you pay it back, how many late payments you've had, what percentage of your credit maximum you've used, and so on.
The higher the number, the better your credit report is. Typically, a score above 720 is considered a good credit score, but if you're below 600, you're in trouble.
For many reasons, your credit score seems to be closely related to your income level. In fact, Value Penguin reported low-income households had an average credit score of 664.
credit score and income graph
Your credit report is important because it tells prospective lenders, employers, landlords, and others how responsible you are with your credit. If you have a bad credit score, you might not qualify for a loan you want because a banker wouldn't see you as responsible enough to pay it back effectively.
A landlord might also turn down your application for an apartment because he/she might have reservations on whether or not you can keep up with rent. Believe it or not, employers sometimes look at credit scores as well to see how financially responsible a potential employee is. Obviously, learning responsible credit habits isn't just important, it's a necessity.

Rebuilding Your Credit Score

According to Sarah Davis from Money Under 30, if you have bad credit "you could end up paying over $200,000 more [than someone with good credit] in unnecessary interest just because of bad credit."

Seen in this new light, bad credit and debt essentially become the same thing. Debt gives you bad credit and bad credit gives you even more debt. It's a hole that needs to be filled.

Here are the best methods for rebuilding your credit score:

The Piggybacking Method

According to Matthew Pillmore, President of VIP Financial Education, you can begin piggybacking off of a friend or family member’s credit card account to get your credit score up to 700+ in as little as 45 days.
This is a credit building method that FICO has threatened to remove from its factoring of credit scores, but it still works. The piggybacking method allows those with low credit to become an authorized user (AU) and adopt the entire credit history of the said account.
But, does your negative credit affect the credit score of the primary account holder? No, only good credit history is "adopted" to either person’s credit history. Make sure you become an authorized user in such cases (don’t use co-signing, as it is much riskier for both parties). The best accounts to be added to will meet the following criteria:
  • Must be accounts that report (if the creditor doesn’t require the authorized user to provide an SSN, it can’t report on your credit report. Otherwise, you should ask the creditors or lenders ‘am I liable for this account?’)
  • Make sure the account has a long history (over 5 years). You want to add substantial history to your account so that it has a large and highly positive impact on your credit score.
  • The account has a large credit limit (at least $5000). Balance must be low and has to have been paid on time every month. Be very careful — obviously, you should only add accounts that are going to positively contribute.
The recommendation is that you should use the piggybacking method, not to boost your credit score, but to get it to a place where you can start building your own positive credit history.
Remember, the goal when using the piggybacking method isn’t to get financing quite yet. Instead, the piggybacking method should be the first step you take to building your credit score.

Examine Your Credit Report and Dispute Mistakes

Since the information that counts most is that which the credit bureaus have, you should contact to get your yearly free credit score or a credit report from each one. Make sure to get your full credit report from all three credit bureaus, TransUnion, Equifax, and Experian. Examine your credit report meticulously.
You are looking for errors pertaining to:
  • Your identity (name, phone number, or address)
  • Incorrect account status (closed accounts are open, report states you are the owner of the account instead of AU, incorrect report of delinquent status, same debt listed multiple times, etc.).
  • Balance errors (incorrect credit limit or current balance).

Focus On High-Interest Debt

The first step when you find an injured person is to stop the bleeding — the same is true of stopping a declining credit score. You have to find the source of the damage and immediately stop the loss of credit. This means you need to tackle your debts head on.

Putting extra money toward high-interest debts is a popular debt and credit management strategy. It is more commonly referred to as the debt avalanche method. The advantage of this method is that it lowers your debt-to-income ratio, an important factor in determining your credit score.

Additionally, you can try to identify accounts in which you are nearing your credit limit. Staying well below your credit limit will help you maintain and build a healthy credit score.

How Does Divorce Affect Your Credit Score?

Divorce is a nasty business and it has been used in the past to harm an ex's credit score. It's important to know that it isn't the actual divorce itself that often hurts a person's credit score, it is the negative circumstances that divorce causes. And divorce doesn't necessarily have to hurt your credit report; it is possible to make a clean break.
If a couple has a joint account before the divorce, they are still jointly responsible for the account after divorce. Judges have been known to assign one spouse the financial responsibility for such accounts. In some sad cases, the spouse responsible for paying the account will purposefully neglect to pay fees in order to hurt their ex's credit score out of spite.

How Does Debt Settlement Affect Your Credit Score?

There's no sugarcoating it: working with a debt settlement company can do some serious damage to your credit score. Some experts say that applying for debt settlement is almost as bad for your credit as declaring bankruptcy.
Asking for a settlement in and of itself won't hurt your score, but once the request is reported, your credit score will more than likely be lowered. For example, in 2009, FICO released two hypothetical scenarios of how debt settlement would affect two consumers' credit scores. One consumer with a score of 680 experienced a loss of 45–65 points. The other consumer with a score of 780 experienced a loss of 140–160 points.
When a debt is settled, creditors or lenders may mark it on your credit report as "Settled" or "Paid Settled." To be truthful, any status other than "Paid as agreed" or "Paid in full" is bad for your credit, but anything is better than "Unpaid." Sometimes a lender will list your debt to the credit bureaus as "Paid" depending on your debt settlement company and your lender, and this won't hurt your credit report as much.
Regardless, it's tough to tell when this will happen.
Remember, if you're already 180 days behind in paying back your credit card, your credit history likely isn't going to get much worse. At that point, debt settlement would be an excellent option.
If you're not even 120 days behind on your credit card payment, proposing to a debt settlement company probably isn't the best idea. Debt settlement should be a last resort. And since that's the case, you shouldn't waste your time going with companies that aren't established and reliable.
Customers should be aware that lenders are under no obligation to settle a debt, so be aware that a debt settlement company that guarantees such negotiation is likely being dishonest.

Expert Debt and Credit Repair Advice

I asked dozens of debt experts what they considered the best strategies for both getting out of debt and rebuilding your credit score. Here's the best of the best of what they had to say:

Credit Utilization - Joe Hogan (LinkedIn), Director of Financial Planning at Mariaca Wealth

Credit utilization is a measurement of the usage of your available credit compared to the maximum allowed by the lender. It is calculated by taking the ratio of outstanding credit balances to the overall limits.
High credit utilization negatively impacts one’s credit score. From the lender’s perspective, someone who is taking out a high percentage of the credit offered to them is a higher risk than someone who uses lower amounts. High credit utilization can be an indicator that a borrower is financially overextended and may fall behind on payments. This is so important to lenders that it accounts for 30% of your credit score.
A high credit utilization is typically calculated as over 30%. Lenders evaluate credit utilization on each source, not as an aggregate.
There are a few easy ways to lower credit utilization and increase your credit score. First, you can make payments more frequently to continuously carry a lower balance. If a lender is reporting figures to the credit bureaus a few days before your payment, you may have your highest utilization ratios of the month being reported to the lender. You can also increase your credit limits through your existing lenders to decrease your utilization. Of course, the easiest thing to manage your credit utilization is to use your credit card prudently, only borrowing what you can repay now.

Credit Counseling - Howard Dvorkin, CPA and Chairman of

For people obsessed with secret hacks, they’re not going to like what I have to say. Your best bet, hands down, is credit counseling.

The problem is, few people believe it’s real. I’ve been asked, “How can there be a nonprofit that wants to give me free advice on how to get out of debt? And if it’s free, how good can that advice be?’ But it’s true. Nonprofit credit counseling agencies exist, some for decades.

You can call a certified counselor for a free debt analysis. From there, you might be pointed toward a program that costs you a few bucks, but always much less than you’ll save. Or you can say, “No thanks” and just jot down the advice they give you. I never understand people who pay up front for a service they hear once on the radio, but they won’t make a free call to a nonprofit.

Debt Avalanche Method - Caleb Backe, CFO of
Because payment history is one of the first considerations of credit bureaus, it’s important to pick a debt strategy that will enable you to make payments on time and positively affect your credit score.
The debt avalanche method of overcoming debt works on the assumption that you are legitimately able to curb spending and increase your earnings. Likewise, this strategy requires any money left over at the end of each month go to minimizing your debts. Unlike the snowball method, debt avalanche has borrowers concentrate on paying down their debts with the highest interest rates first. Even if this debt is not your highest, it’s the most expensive.

Different Debt-Payoff Strategies - Mikel Van Cleve (Twitter), Director of Personal Finance for USAA

The impact on one’s credit score can vary from person to person depending on other factors in a person’s credit history. Having said that, there are certain potential impacts on a person’s credit score to consider when evaluating different debt payoff strategies.
DIY payoff methods - Find extra cash flow each month to put toward debt. USAA uses a 3-As approach to help members pay down debt: assess, avoid, and attack. Assess the amount of debt you have and your budget. Avoid adding more debt until things are under control. Put away the credit cards and put some money into savings so you won’t need the credit cards when life throws you a curveball. Attack by putting together a debt payoff strategy and sticking to it. USAA offers its member a free Debt Manager tool to create a plan and track progress. Following this approach could help improve an individual’s credit by lowering the amount of debt you owe. Amounts owed or utilization is the 2nd largest factor in the FICO® credit scoring models.
Balance Transfer – You could consider transferring credit balances to a card with a lower balance. There are fees and interest rate terms to consider with this approach. There’s also the risk of transferring the balance to another card and then charging up the old card again. This would negatively impact one’s credit. You may need to apply for a new card to do the balance transfer, which could have some impact on the credit score due to the inquiry. Additionally, if you close the old card and the new card has a lower credit limit, you could increase your utilization and lower your score.
Consolidation loan – Like a balance transfer, be sure to understand the fees, interest rates, and terms. Also note that while a consolidation loan may make the payments more manageable, it could be the result of paying over a longer time period which could cost you more in interest. Applying for a new loan or closing the old credit account(s) would have the same impact as mentioned under balance transfers.
Debt Consolidation and Forbearance - Jennifer McDermott (Twitter), Consumer Advocate for
Debt consolidation – Consolidating debt by taking out a larger one or transferring the one credit card can help people pay off debt faster as it can be easier to manage in one rather than multiple places. It may also see you benefit from a lower interest rate which will mean you pay less in the long run. If you are closing accounts you have had for some time this can negatively impact your credit score as it will lower your credit age. However, it may have a positive impact if you are using a credit card with a higher limit, lowering your credit utilization rate. Deciding on this method really comes down to the terms and conditions of the consolidation method being a better fit.
Forbearance programs – If falling on hard times is making it challenging for you to repay your debt, you may be eligible for forbearance. This is when a creditor gives you a grace period in which you can pay a smaller amount for a temporary amount of time. The credit card debt still needs to be paid back in full, but you have some of the pressure taken off while you get back on your feet. This should make it easier to make your monthly minimums, which means your credit score won’t be impacted by missed payments.
Refinancing - Dock Treece, Staff Writer at
To my knowledge, just about any debt negotiation strategy has some kind of negative impact on a debtor’s credit. Bankruptcy hurts your credit, as do debt settlements. Debt forgiveness often has a short-term negative impact, as it’s almost always part of a larger debt settlement. Even refinancing requires hard credit checks, lowers the age of your credit, and raises your utilization – all things that can hurt your credit score.
If you’re looking to negotiate debts, overall the best thing you can typically do is try to refinance. Try consolidating debts and rolling everything into a term loan with a set payment schedule that you’ll have no trouble meeting. Most importantly, quit adding to your balance. These steps, taken together, will minimize the negative impacts on your credit and allow you time to rebuild your score.

Debt Is Temporary

Remember, if your credit score is suffering, it doesn't have to be like that forever. With patience, you can raise it by practicing some basic habits:
  • Don't buy anything you can't afford immediately
  • Always make credit card payments before the due date comes
  • Don't make expenses surpassing one-third of your credit card maximum
If your credit report has been dinged and you still have debt, you should seriously consider getting your debt under control before focusing on rebuilding your credit score (in most cases, the two go hand-in-hand).
If you find yourself over your head and debt settlement is the only option, there are reputable companies waiting for you. Best Company has rated nearly 50 debt settlement companies operating in all 50 states. Companies such as Freedom Debt Relief and Pacific Debt Inc. currently rate the highest in terms of customer satisfaction, operation fees, and accreditations.
It can be hard to have a temporarily bad credit score, but it's not as bad as having a substantial amount of unpaid debt hanging over you.
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