Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.

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Building your credit can make it easier to get approved for financial products, and with a lower interest rate. Learn how to improve bad credit in 10 ways. (iStock)

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If you don’t have a credit history, or your credit isn’t in the best shape, you might have trouble getting approved for financial products, like credit cards or personal loans.

Improving your personal credit can help you pay down debt, earn a higher credit score, and get approved for better loan terms and lower interest rates, unlocking the door to a healthier financial life.

The good news is that it’s possible to improve your credit by taking small steps. If your credit needs a little work, these 10 strategies can help you improve bad credit and reach your financial goals.

Taking out a personal loan to consolidate high-interest debt is one way to improve your credit over time. Creditable makes it easy to see your prequalified personal loan rates from various lenders, all in one place.

10 ways to improve bad credit

You have myriad ways to improve bad credit. Some may take a while to have a positive impact on your credit score, but all are well worth doing if your goal is to boost your credit.

These 10 strategies are at the top of the list.

1. Become an authorized user

Piggybacking on someone else’s good credit by becoming an authorized user can be a solid way to improve your credit score,

The concept of becoming an authorized user is simple. Someone with good credit, like a parent or guardian, can add you to their credit card account as an authorized user. You’ll receive your own credit card that you can make purchases with, but you aren’t legally responsible for making payments (although users can help the cardholder with authorized payments.)

Authorized user status particularly helps new financial consumers get a good start on building their credit, which is why parents often add their kids to their credit card accounts as authorized users.

If you go this route, check with your credit card issuer to make sure the major credit-scoring agencies will add the account of the primary cardholder to your credit report.

2. Get a secured credit card

A secured credit card is a “starter” card that offers new credit consumers, or those with a shaky credit history, a path to better credit. With a secured card, you deposit cash upfront into a credit card issuer’s account as collateral for the card.

Your credit limit will typically be for the same amount as your security deposit. For example, if you open a secured credit with a $300 deposit, you’ll have $300 worth of credit. Once you start using the card and continue making on-time payments, the credit-scoring agencies will note your ability to handle credit (if the card issuer reports your payment history), which can improve your credit score.

Once you’ve made on-time payments on your secured credit card for a certain amount of time, some credit card issuers will automatically “graduate” you to a traditional credit card.

3. Apply for a credit-builder loan or secured loan

A credit builder loan is another tool that gives new financial consumers, or consumers with bad credit, a chance to build a solid personal credit profile.

A credit-builder loan doesn’t actually produce any funds until you pay the loan in full. When you open this type of loan, the financial institution will deposit a small amount into a locked account. You’ll repay the lender over six to 24 months, and the lender will report your payments to the credit-reporting agencies, which can help you improve your credit. At the end of the loan term, the lender will give you the funds (sometimes with interest).

With a secured personal loan, you’ll provide an asset as collateral, like a car or bank account. If you have bad credit, it’s usually easier to qualify for a secured loan than an unsecured personal loan. But keep in mind that if you don’t repay the loan as agreed, the lender can take your collateral.

4. Find a cosigner with good to excellent credit

Another solid way to improve bad credit is to get a cosigner for a credit card, personal loan, or other form of credit.

Aligning with a family member or close friend with good credit to cosign a loan can improve your chances of getting approved, and with a lower interest rate.

In any cosigning agreement, both parties should establish ground rules upfront, because your cosigner will be responsible for making your loan payments if you aren’t able to. Making your loan payments on time can help you build a positive payment history, which in turn will boost your score.

Creditable makes it easy to compare personal loan rates from various lenders — some who allow cosigners — and it won’t hurt your credit.

5. Get credit for paying your rent

You may have to get some help from your landlord, but it’s possible to improve your credit by having your on-time rental payments reported to the major credit-scoring agencies.

Credit-scoring firms won’t accept on-time payment information directly from the renter, or even a landlord. But they’ll work with a third-party rent reporting service that can provide a record of payments for a fee. You’ll have to get your landlord’s cooperation, but getting credit for a sterling history of rental payments on your credit report is well worth the effort.

6. Monitor and dispute errors on your credit report

If you want to boost your credit health, it’s important to review your credit reports regularly.

You can request free copies of your reports from the three main credit bureaus — Equifax, Experian, and TransUnion — at AnnualCreditReport.com. The credit-reporting agencies will also provide access to your credit report, but you may have to pay a fee.

Scrutinizing your credit report can help you catch any errors or mistakes that can damage your credit standing, and catch fraudulent activity by data thieves. A regular credit report review can also instill good financial practices and help you keep an eye on overspending and unnecessary credit accounts.

7. Ask to raise your credit limit

Creditors set a limit on how much you can charge on your credit cards before paying down your balance. But if you can push your credit limit higher, it can help boost your credit score.

Increasing your credit limit can boost your score by lowering your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit. To raise your credit limit, you can contact your credit card issuer directly or submit a request online. Some credit card companies may even automatically raise your credit limit without you having to do anything.

If you’ve been making on-time card payments and you have a stable income, you could be a good candidate for a credit limit increase. But if your card issuer approves your credit limit increase, it’s important to keep your balances low to keep your credit utilization low.

8. Pay down existing debt

Credit card debt can be a wrecking ball to good credit. The mindset of “buy now and pay later” can lead to card spending, higher debt, and aggressive lower credit scores.

Credit-scoring agencies place a high priority on your debt-to-income (DTI) ratio, which is how much of your monthly income goes toward your debt payments. If your DTI ratio is too high, you might have trouble getting approved for financial products.

Prioritizing paying down your debt — especially high-interest credit cards — can help you lower your DTI ratio, which can improve your credit score. Paying down as much credit card debt as you can each month, and making more than the minimum payment when possible, will help you pay down credit card debt that much sooner.

When you pay off a credit card with higher interest, move on to the card with the next highest credit card rate, until all the cards are paid off (also known as the debt avalanche method).

Stay diligent and disciplined, and try to avoid charging new purchases to your credit cards during the paydown period to avoid getting stuck in a cycle of debt.

9. Make good on past-due payments

If you’ve dug yourself a financial hole with a late debt payment, or if you’ve missed a payment, start the financial healing process by catching up on any past-due payments.

There’s bad news and good news in this process: The bad news is that late payments can remain on your credit report for up to seven years, which can hurt your score.

The good news is that by catching up on past-due bill payments, you’re bringing your accounts current, which is positive for your credit report. As late or missed payments drop off your credit reports, your score can increase.

Plus, there’s a bonus: You won’t incur any more late fees once you catch up on late bill payments.

10. Pay your bills on time

Of all the strategies for improving bad credit, paying your bills on time is the most important thing you can do to boost your credit, since your payment history is the biggest factor that determines your credit score.

When you establish a track record of paying your bills on time, you’ll improve your credit score and become a better credit risk in the eyes of lenders.

To help you remember to pay your bills on time, set up automatic monthly payments with your creditors, like your mortgage lender, auto loan lender, and credit card companies. Make sure your connected bank account has enough funds to cover your bill payments. You can also set up reminders a few days before your monthly bill payment…