We surveyed members who successfully built their credit. Here’s what we learned.

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In a Nutshell

Credit Karma surveyed members who started in the deep subprime (580 or lower) and subprime (580-639) credit score ranges and raised their score by either 50 to 99 or 100+ points. We asked them what specific actions they took to help build their credit. Here’s what we learned from them — and what I’ve learned on my own credit-building journey.

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Whether we like it or not, credit scores play a huge role in our lives.

Your credit scores may help determine whether you have access to favorable rates for auto loans and mortgages, or whether you’ll be able to get approved for certain credit cards or personal loans.

You might already know there are two major credit-scoring models: VantageScore and FICO. And they take a few key factors into consideration when determining your credit scores, including credit card utilization, payment history and age of your credit history. But while knowing these factors helps you understand how the scoring models calculate your credit scores, it doesn’t really help identify what actions you can take that can help build credit.

That’s why we reached out to our members to ask them about the actions they took that they think led to improvements in their credit health.

We surveyed more than 2,000 members who joined Credit Karma between January 2016 and December 2018 with a deep subprime or subprime TransUnion VantageScore 3.0 credit score, and have since raised their score at least 50–99 or 100+ points. This increase lifted some out of deep subprime credit score range (580 or lower), and others out of the subprime credit score range (580 to 639).

We’re not here to tell you that taking these actions are guaranteed to increase your scores, but we’re hoping that these members’ actions will help you see that building credit is not impossible if you’re willing to put in the time and work. Here’s what we learned.


What members did to build their credit

Credit Karma members from our survey who saw their score increase said they followed a few common strategies to help build their credit.

More than half of members who responded to the survey (63%) said they paid down their existing debts. Other tactics included reducing overall expenses, paying bills more than once in a billing cycle, setting up autopay or payment reminders, and paying off or settling a collections account.

Here are the top five actions members said they used to help build their credit (plus, we’ve provided some insight into why taking these actions may have helped their credit health).  

1. Paying down credit cards and/or other debts

Most members surveyed said they paid down their credit cards or other debts.

Our take: Paying down credit card and other revolving debt can help build credit if you’re able to lower your credit utilization rate below 30%. Credit utilization rate describes how much of your total available revolving credit you’re using. Your credit utilization rate is one of the more important factors that goes into determining your credit scores, and it’s generally recommended to keep your credit utilization rate under 30%.

2. Reducing general expenses by spending less

Many members from our survey also said they thought spending less helped them improve their credit.

Our take: Spending less, especially on credit cards, could have helped these members build credit by lowering their overall utilization rates. Taking this action can also have the added benefit of making your debt and spending levels feel more manageable.

3. Paid bills more than once in a billing cycle

Many members also pointed to paying bills multiple times in a billing cycle.

Our take: Paying your bills more than once a billing cycle can help ensure you don’t miss a payment or make a late payment. Paying your credit card bills more than once a month can also help you keep an eye on your credit utilization rate and how much you’re spending on your cards.

4. Set up payment reminders and autopay

This is another action members said they took that may have helped them on their credit journey.

Our take: Making on-time payments is one of the most important factors that credit-scoring models take into account when determining your credit scores. In other words, having a long history of on-time payments is good for your credit scores, while missing a payment could hurt them. 

5. Paid off or settled a collections account

Many members from our survey said they thought paying off or settling a collections account may have helped their credit.

Our take: Having an account in collections can hurt your credit scores. How much it impacts your scores depends on the health of your credit and a number of other factors. Paying off or settling a collections account can remain on your credit reports as a paid collection, but it can reduce the impact to your credit scores depending on the credit-scoring model.   

There’s no guarantee that taking the above actions will improve your credit scores — every person’s situation is unique after all — but these findings reveal a few key learnings: Working on your credit is a conscious effort that involves setting personal goals for yourself, sticking to them and developing healthy financial habits over time.

And we definitely saw this with the members we surveyed. In addition to the credit-building actions reported above, most of the members we surveyed (71%) said that they set a specific credit score goal to actively work toward. And two-thirds (66%) of members we surveyed joined Credit Karma specifically to work on their credit.


My own credit-building journey

Like many of the Credit Karma members we surveyed, I’ve also been working on building my credit since learning what my credit scores were and what factors could affect them.

Everyone has their own credit journey story. Mine started with overspending on a credit card in grad school while I was between jobs. After that, I knew my credit wasn’t great. But I didn’t realize that forgetting to pay a credit card once or keeping a high balance on an account could impact my credit scores so much.

I knew I always wanted to be financially independent and to someday be able to get a better rate on an auto loan or mortgage. And once I had access to educational content that taught me about credit and ways to actively monitor my credit scores, I took action.

1. Paid down my debt — Like many Credit Karma members we surveyed, I worked to pay off my credit card balances and other debts first. Once my credit utilization rate was lower than 30%, I began to see an improvement in my scores.

2. Paid off collections accounts — Seeing my credit reports made me realize there was an old collection account that was on there. So I contacted the debt collector and paid it off. It’ll still be on my credit reports for a while (this could even be up to seven years from the date of my first missed payment on the account), but having a collection account reported as paid seems to have been a good step forward.

3. Set up autopay and payment reminders — It can be really easy to forget the due dates for your credit cards, especially if you’re traveling. Yup, that happened to me. If I’d had autopay set up on my accounts, I probably wouldn’t have missed those credit card payments. Now, I make sure autopay is set up on all my credit card accounts so that I’ll pay at least the minimum balance due each month.

4. Paid bills more than once in a cycle — I now treat my credit cards like debit cards and pay off any balances as soon as they process. Paying my balances more than once per billing cycle is a strategy that has helped reduce my credit utilization rate.

Everyone is different, but I know in my case, it really took seeing my credit scores and credit reports and being aware of what my credit situation was in order to be motivated to make change. My credit-building journey is far from over, but today, I’m no longer ashamed of those three little numbers that make up my scores.


Bottom line

Credit scores can be confusing and intimidating. But a little education and strategy can help you on your credit-building journey. Having an educational tool that shows what’s going on with your credit can be especially helpful.

And, it’s important to remember that building your credit is truly a journey — you may not see all the progress you want within a few days, weeks or months. But keep at it — you’ve got this!


Methodology

To learn about the credit-building habits of our members, Credit Karma surveyed 2,541 members who joined Credit Karma between January 2016 and December 2018, and who joined Credit Karma with a TransUnion Vantage 3.0 credit score in the deep subprime (<580) and subprime (580 to 639) ranges. These members saw improvements to their credit score of 50 to 99 points or 100+ points between signup and their score as reported in June 2019. Scores were last pulled in June 2019.