How to Improve Your Credit Score with Credit Cards and Loans

Nov 03, 2023 By Susan Kelly


Having a good credit score is crucial in today's financial world. It can determine whether you're approved for a loan, what interest rate you'll receive, and even affect your ability to rent an apartment or get a job. Improving your credit score may seem daunting, but with the right strategies, it's entirely possible—even with credit cards and loans.

Understanding Your Credit Score

Before delving into how credit cards and loans can help improve your credit score, it's essential to understand what a credit score is and how it's calculated. A credit score is a three-digit number that represents your creditworthiness—how likely you are to repay debts on time. It's based on information in your credit report, such as your payment history, credit utilization, length of credit history, types of credit used, and new credit inquiries.

Using Credit Cards to Improve Your Credit Score

Credit cards can be powerful tools for improving your credit score, but only if used responsibly. Here's how:

Make Timely Payments: Payment history is the most critical factor in calculating your credit score. Consistently making on-time payments can significantly improve your score. Set up autopay or reminders to ensure you never miss a payment.

Keep Your Balances Low: Credit utilization—how much of your available credit you're using—is also a key factor. Aim to keep your balances below 30% of your credit limit to avoid negatively impacting your score.

Use Multiple Cards Sparingly: Having multiple credit cards can improve your score by showing that you can manage multiple accounts responsibly. However, avoid opening too many accounts in a short period, as this can hurt your score.

Using Loans to Improve Your Credit Score

Loans can also be effective tools for improving your credit score, but again, only if used responsibly. Here's how:

Take Out a Small Loan: If you have no credit history or a limited one, taking out a small loan can help you build credit. Look for a loan with manageable payments and a reasonable interest rate.

Make Regular Payments: As with credit cards, making timely payments on your loans is crucial. Consistently paying on time can significantly improve your credit score.

Diversify Your Credit Mix: Having a mix of different types of credit can also help improve your score. For example, having both installment loans (like a car loan) and revolving credit (like a credit card) can show lenders that you can handle different types of debt responsibly.

Additional Tips for Improving Your Credit Score

In addition to using credit cards and loans responsibly, here are a few more tips for improving your credit score:

Check Your Credit Report Regularly: Request a free copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) annually. Review them for any errors or fraudulent activity that could be negatively impacting your score.

Dispute Errors: If you find any errors on your credit report, dispute them with the credit reporting agency and the company that provided the information. This can help improve your score by removing negative information that isn't accurate.

Avoid Closing Unused Accounts: Closing unused credit cards or loan accounts can actually hurt your credit score by reducing your available credit and shortening your credit history. Instead, keep them open and use them sporadically to keep them active.


Improving your credit score with credit cards and loans is possible, but it requires responsible use and a commitment to making timely payments. By following the strategies outlined above, you can gradually improve your credit score and increase your financial options. Remember, consistency is key—stick with it, and you'll see results.


How long does it take to improve my credit score?

Improving your credit score takes time and depends on several factors, including your current score, the negative information on your credit report, and your ability to make timely payments. Generally speaking, it can take several months to see significant improvement.

Can I improve my credit score if I have bad credit?

Yes, it is possible to improve your credit score even if you have bad credit. The strategies outlined in this article can help you gradually improve your score over time. However, it's important to be patient and consistent with your efforts.

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