The Best Strategies for Improving Your Credit Score With a Limited Budget

Personal Finance
Kevin Humbold

March 6, 2023
9 mins read

There are a lot of different factors that go into your credit score – and it can be tough to keep track of everything. In this blog post, we’ll share some of the best strategies for improving your credit score, even if you have a limited budget. So read on for some helpful tips.

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  1. Check Your Credit Report Regularly
  2. Pay Down Existing Debt
  3. Make Payments On Time
  4. Utilize Balance Transfer Offers 
  5. Don’t Close Unused Credit Cards
  6. Monitor Your Spending Habits


Managing your credit score is important in setting yourself up for financial success. Most lenders, landlords, insurers, and even employers look at individuals’ credit scores before extending financing or other opportunities. As a result, understanding the factors that are taken into account when calculations are made to determine your credit score can help you make more informed choices about how you use and manage your finances.

Lenders calculate credit scores using a variety of factors, including payment history on loans and credit accounts, the amount owed on current and past accounts, the length of an individual’s credit history, new credit inquiries, types of borrowing, and recent debt repayment activity. Each factor is assigned a different weight and is used to calculate an overall score that reflects your creditworthiness. These scores range from 300 to 850 points, with higher scores indicating better financial health.

Check Your Credit Report Regularly

It’s important to check your credit report regularly, as errors can sometimes occur. Inaccurate information on your credit report – such as incorrect balances or open accounts that do not belong to you – can hurt your credit score and make getting approved for loans or other financial products more difficult. Thankfully, you have the right to dispute any inaccurate, incomplete, or untimely information on your credit report.

If you’ve recently checked your credit report and noticed discrepancies, disputing it with the appropriate bureau is the best course of action. First, you will need to fill out a dispute form that outlines the incorrect information and provide proof that it isn’t correct. This might include bank statements, copies of bills, or other documentation related to the item in question.

It’s also helpful to provide an explanation as to why they should correct this information. Once the bureau files the dispute, it will investigate and respond with its findings within 30 days of filing. If they confirm your argument to be correct, they will remove the erroneous item from your credit report and update your score accordingly.

Pay Down Existing Debt

Paying down existing debt is one of the most effective ways to improve your credit score. Credit card debt, in particular, can quickly become overwhelming and significantly impact your credit score.

One of the primary benefits of doing so is reducing the interest you pay over time. The longer you take to pay off high-interest debts, the more interest fees you’ll be charged – which means that you’ll end up paying more than what you initially owed.

Additionally, by tackling high-interest debt first, you’re basically taking an active step towards improving your credit utilization ratio, which is an important factor in calculating your credit score. Your credit utilization ratio measures how much available credit you’re using compared to your total available limit; if it’s too high (at or above 30%), it can hurt your overall score.

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Make Payments On Time

It is critically important to make all your payments on time, even if they are only minimum payments. Doing so can significantly impact your credit score and financial health in the long run. Paying late (or not paying at all) can lead to penalties and fees that may detract from your creditworthiness, as well as impede your ability to access certain types of financing in the future.

Missed payments can also result in late fees, higher interest rates, and even collections activity if the debt goes unpaid for an extended period. It could also lead to a negative score on your credit report, which can be difficult to recover from.

Utilize Balance Transfer Offers

Balance transfers are one of the most effective ways to pay down existing debt and improve your credit score. By transferring a balance from an account with a high-interest rate to one with a lower rate, you can save money on interest costs – as well as reduce the amount of time it takes to pay off what’s owed.

When researching balance transfer offers, read the fine print before making any decisions; some deals may have hidden fees or other caveats you should be aware of. Taking advantage of these offers may be beneficial if you can commit fully to paying off your debt; otherwise, additional charges may accumulate over time and further damage your credit score and financial standing.

Don’t Close Unused Credit Cards

It’s important to remember that your credit utilization ratio is based on the total amount of credit you have available, not just the balance of your credit cards. Therefore, closing unused credit cards can reduce your total available limit and increase this ratio, which can decrease your overall credit score. Additionally, opening too many new accounts in a short time can have a similar effect, as it could indicate to lenders that you are struggling financially and may be unable to pay back what you owe.

Generally speaking, it’s wise to keep these accounts open even if you aren’t using them frequently; if possible, make small monthly purchases or payments so that they remain active without leading to additional debt or fees.

Monitor Your Spending Habits

Finally, it’s important to be mindful of your spending habits and create a budget that works for you. Many people find it helpful to track all of their expenses in writing or through an app. This can help you stay on top of bills and other payments while also keeping you aware of where they’re overspending or going beyond what their income allows.

Sticking to a budget can help ascertain that you don’t add more debt than necessary and keep your credit utilization ratio within an acceptable range.


By following these strategies, you can take the necessary steps to improve your credit utilization ratio and ultimately increase your overall credit score. However, it is important to remember that restoring your credit takes time and dedication – so be sure to stay consistent with payments and monitoring of your accounts to make lasting improvements.

Additionally, if you are looking for a loan for bad credit, there are many lenders who may be willing to provide financing despite your lower score. Researching and comparing different offers can help you find the best option.

Remember, even small changes can make a big difference when it comes to your credit score!

About the Author
Kevin Humbold

Guest Author

My name is Kevin Humbold, I am a freelance writer with a passion for household finances, restoration, and improvement. An avid reader and enthusiast of real estate aimed mostly at families’ homes. My biggest goal is to help people understand the pros, cons, opportunities, and difficulties that come from taking the big step of acquiring our own place, and how to turn that apartment or house into our new home.

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