As a credit cardholder, one of the things you may be interested in is staying on top of your credit score. Some factors that help your credit score include making your credit card payments on time and, when possible, in full. Ideally, you would not be carrying a balance on your credit cards, but if you’re unable to do that, keep your balance as low as possible.

Consider these factors and tips when working on your credit score:

Understand What Can Change Your Credit Score 

A good first step toward understanding your credit is checking your credit reports. You’re entitled to free credit reports once a year from each of the three credit bureaus (during the COVID-19 Pandemic, the bureaus are offering free weekly credit reports). You can check the report for mistakes to flag, such as a bill you paid but is mislabeled as unpaid, or someone else’s information mixed with yours.

These errors could be dinging your credit score through no fault of your own. Reporting those errors is an important step.

Here are five other common reasons why your credit score may have dropped recently.

  • A missed or late payment. A payment on a credit card bill or loan that’s more than 30 days late could shave points from your credit score. Payment history is a large component of a credit score, so any missed payments will likely hurt.
  • A high carried balance. Using a high percentage of your available credit might negatively impact your credit score. Your credit utilization ratio, which measures how much of your available credit you are using, forms a significant piece of your credit score.
  • Credit inquiries. Applying for new credit racks up hard inquiries, or instances when potential creditors look at your credit report. These can count against you since a consumer adding credit may be adding debt.
  • You canceled a card. Retaining an old card may be more valuable than closing the account because closing a card likely lowers your available credit, which can raise your credit utilization ratio. 
  • A creditor cancelled a card or lowered the limit. When this happens, a creditor may be concerned you’re a heightened credit risk. Similarly, asking for a lower credit limit to help you manage spending may negatively impact your credit score.

Build Credit History

A good way to prepare yourself for your future is, well, having a line of credit in the first place. If you’ve never had a credit card before, consider applying. A no annual fee credit card, like those offered by Discover, is a good place to start. You can also see if you’re Pre-Approved for any Discover cards before you apply.

If you lack credit history, one option is to look into secured credit cards. Secured credit cards come with an upfront cash deposit which sets your credit limit. Paying the secured credit card in full and on time can help build your credit history in a beginner-friendly way. Some secured cards even allow you to earn rewards, such as the Discover it Secured Credit Card and its 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter.*

Pay on Time

Remember that your payment history accounts for a sizable part your credit score, so you might positively impact that score by paying bills in full, on time, every time.

If you’re trapped in a cycle of missed payments, consider seriously evaluating your spending and setting a tight budget until you get your credit card balance under control.

If you paid a bill a few days or weeks late and were hit with a late fee, you may ask the credit card company immediately for a “goodwill adjustment” to reverse the late fee. A creditor may be willing to offer this courtesy adjustment if you have a history of on-time payments.  Note, even if the fee is waived your missed payment may still appear on your credit report.

You may also be curious about what date a credit card issuer reports your activity to the credit bureaus. Typically, card issuers report to the credit bureaus on your statement closing date, and you can find information relating to your specific credit card(s) on your credit card statement. Discover cardmembers can find additional information under the Credit Reporting section of their statement. Log in to view your statement and more.

Don’t Max Out Your Credit

While you want your credit score to be higher, you want your credit utilization ratio to be lower. That ratio is the percentage of your available credit that you spend. Look at it this way: If you have a credit limit of $1,000 and you spend $500 before you pay the bill, that’s a credit utilization ratio of 50 percent.

But, not using credit at all often doesn’t help, since you aren’t building a track record of responsible credit usage. Generally, it’s recommended that you use as little as possible of your available credit as a low credit utilization ratio indicates that you aren’t overspending and are doing a good job of managing your budget.

Here are some tips to keep that ratio low:

  • Ask for more credit. If your credit limit goes up but your spending stays flat, your credit-utilization ratio will fall.
  • Pay your bill more often. Rather than racking up a larger bill that you pay each month, you can pay in smaller installments multiple times per month. This keeps the balance that your credit card company reports to the credit bureaus lower.
  • Charge less on your card. A simple way to keep that credit utilization low is to minimize how much you’re charging each month.

Be Patient

Of course, it’s easy to list steps with concrete deadlines and goals, like 30 percent credit utilization ratios or paying bills on time. In reality, it’s harder to examine the habits that might have kicked off poor credit cycles and turn them around.

Once you’ve tackled the steps above, consider devoting some serious thought to your next moves:

  • First, you may want to structure your budget so you pay your bills on or near the first of the month, or whenever you get paid. That way, you can get the payment out of the way while your bank account is flush. Set reminders on your phone or calendar for the monthly due dates. Many credit cards allow you to set up email alerts as well. Also, consider using an autopay option if you pay about the same amount each month.
  • You can also take some time to research your credit card options for future cards or balance transfers that can lower your interest rates. Choose them like you would a business partner: with research, selectivity and a solid understanding of how they can help you succeed. The best cards on the market have low APRs, low (or no) fees and added benefits such as fraud protection and rewards programs that suit your lifestyle.
  • Finally, review your budget and spending habits over the past few months and try not to spend more than you have. This is often easier said than done, as it can involve tracking your spending, making a budget, and sticking to it. Creating an emergency fund is often a good idea, too. And making savings goals for big purchases, instead of just jumping on sales or desires. Purchasing your new TV will feel even sweeter when you leave the store with it paid for free and clear.

Originally published June 10, 2016.

Updated April 29, 2021.

Chrome Disclosure: You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters are defined as the three-month periods beginning January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Purchases made at Gas Stations include only merchants in the category that sell automotive gasoline that can be paid for either at the pump or inside the station. Gas Stations affiliated with supermarkets and supercenters may not be eligible. Restaurant purchases include only those made at merchants classified as full-service restaurants, cafes, cafeterias and fast food locations. Certain digital wallet transactions qualify for 2% Cashback Bonus, for more information see Discover.com/digitalwallets. Purchases made through third-party payment accounts, mobile or wireless card readers, virtual wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification. 2% Cashback Categories: In accordance with standard industry practices, merchants are assigned a merchant category code (MCC) typically based on their line of business, or the type of products and/or services they primarily sell or provide. Discover Card does not assign MCCs to merchants. Even if you make purchases at a merchant of items that appear to fit in a rewards category, the merchant may not have an assigned MCC in that rewards category. Only purchases made from merchants located in the United States are eligible for 2% Cashback Bonus. In order for a purchase to qualify for the 2% Cashback Bonus Program, the transaction date must be before or on the last day of the offer or promotion. Rewards are added to your Cashback Bonus account within two billing periods. See Cashback Bonus  Program Terms and Conditions for more information about your rewards.

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