Improving your credit can often feel like navigating through a jungle. It’s disorienting. To make matters worse, most schools don’t teach students about credit. The good news is that with a little work, you can master credit and begin to increase your FICO score.

Before we dive in, let’s quickly explore why you should even care about improving your FICO credit score.

Having Excellent Credit Can Save You Thousands

During your life you will likely need to borrow money at some point. For many people it’s to be able to go to school. For others it’s an auto loan to buy a car or a mortgage to purchase a home.

Regardless of why you need to borrow money, your credit score will affect your ability to borrow money and the interest rates you are offered.

In fact, the difference between a top credit score and a less than stellar one can mean paying over $100,000 more in interest over the duration of a $350,000 mortgage. That’s a lot of money to pay simply because you didn’t put in the work to improve your credit score.

Aside from lowering your interest rates, having solid credit will give you access to the cash back credit cards with the best perks. Some employers even check credit records as they move candidates through the hiring process, so it could even affect your career. In some states, your credit can also affect your auto insurance rates.

With that, here’s what you can do to get your FICO credit score moving in the right direction.

Related: Find The Loan That’s Right For You

Improving Your FICO Credit Score – Step by Step

1. Check Your Credit Reports For Accuracy

Trying to improve your credit without checking your credit report is like embarking on a road trip without a GPS. In the case of credit scores, your credit report is your GPS.

Two free and easy ways to check your credit report are AnnualCreditReport.com and CreditKarma.com. Your official credit report won’t list your credit score, so don’t be surprised if you can’t find it. CreditKarma gives you an estimated score, which should be pretty accurate. But it’s not a score based on the FICO formula. Fortunately, there are ways to get your FICO score for free.

Once you have your credit reports from the three major bureaus it’s imperative that you check them for accuracy. A study by the FTC found that “one in four consumers identified errors on their credit reports that might affect their credit scores.” So it’s clear that reporting mistakes are common.

If you find an error, you need to contact the bureau(s) directly to correct the error and verify that all the information is correct. This alone could quickly improve your credit.

2. Make Sure You Always Pay Your Credit Accounts on Time

Your payment history is the most important factor in your credit score calculation. Everyone knows that not paying their credit accounts will hurt their score, but you might not realize that a late payment will stay on your report for up to seven years.

If you regularly make on-time payments it gives prospective lenders comfort that you are responsible with your money. On the other hand, if you have a history of being behind on payments, it’s critical that you change this pattern as soon as possible.

Even if you are unable to pay your cards off in full on a monthly basis, which is widely considered the best approach, making the minimum payment regularly will keep your accounts in good standing.

If you have trouble remembering to make the minimum payments, I recommend that you set automatic payments up within each credit account so that you won’t miss any payments. You’ll just have to make sure you always have enough money in your bank account because most lenders (and your bank) will charge you a fee for insufficient funds if you don’t.

3. Lower Your Credit Utilization

The second most important factor that goes into calculating your credit is the amount of credit that you use as a percentage of the total credit available to you.

In other words, if you have a credit card with a $2,000 limit and your card balance is $1,000, you are utilizing 50% of your credit.

In general, the lower your credit utilization is, the more attractive you are to lenders because it signals that you aren’t over-extended and are more likely to use credit responsibly.

If you search around the internet you’ll see a number of different guidelines in terms of which utilization percentage is the best. Some people will encourage you to remain below 35%, while others will recommend below 25%. However, the one thing that is universally agreed upon is that a lower utilization is better. According to a recent report from FICO, those with a FICO 8 score of 785 or higher had, on average, a credit utilization rate of 7%.

Kacey Weiniger, a recent graduate from the University of Southern California who is working to build credit, had to lower her utilization well below 30% to see an impact. Weiniger adds, “I didn’t notice a boost to my credit score until I lowered my utilization below 10%.”

Another way to quickly lower your utilization is to ask for a credit limit increase. The chance of your request being approved is low if you don’t have a solid track record of payment and a decent credit score, but it doesn’t hurt to ask. You’ll also want to keep in mind that more credit can be dangerous if you have a propensity for spending.

4. Take Care of Credit Accounts That Have Been Sent to Collections

Having unpaid accounts sent to collections can wreak havoc on your credit score. Since your credit can impact your financial health, it’s important to sort out any issues you have with lenders.

Discussing how to handle accounts that have been sent to collections is a topic that requires a lot more time and attention than a couple of paragraphs. For that reason, I will leave you with a link to a guide on Reddit that is very comprehensive.

The biggest takeaway is to make sure you request a debt verification letter before you pay a lender who claims you owe them money. It’s fairly normal for banks to sell your loans to other banks and lenders. If you pay without requesting verification, you run the risk of paying the wrong lender.

5. Optimize Your Account Age, Credit Mix And Credit Inquiries

The remaining components of the credit score algorithm include the average age of your credit accounts, the variety of accounts that you have, and the number of new inquiries into your credit.

As the average age of your accounts increases, you’ll receive a bump to your credit score. This is because having more established accounts shows that you’ve maintained credit for a longer period and are therefore a better borrower.

This doesn’t mean that you should close your newest cards, or refuse to ever open another credit account, but you should be conscious of how many new accounts you have. This is especially important if you have a large upcoming transaction like purchasing a home and need to have your score as high as possible.

My twin brother, Francisco Maldonado, who is also my co-founder at The Finance Twins, and I signed up for credit cards on our 18th birthday. We didn’t realize the impact that this decision would have on our credit, but we are now reaping the benefits of having a long credit history.

Our oldest cards have no annual fee and we use them enough to keep them active (banks will sometimes close inactive accounts). This allows us to raise the average age of our accounts, and this, coupled with always making on time payments has allowed us to have credit scores around 800, which is excellent.

Having a variety of different types of accounts is also seen as favorable. For that reason, it could make sense to submit utility payments to a credit bureau if you only have a “thin” credit record, with few accounts. Unfortunately, Experian is currently the only credit reporting bureau that allows you to add some utility payments to your report.

If you have a credit card, a student loan, or a car loan on your report already, it might not be necessary to add utilities. If your credit is in rough shape, however, adding additional on-time payments to your history may help you.

Finally, the number of times your credit is checked by lenders can impact your credit. Admittedly, the effect of an extra inquiry on a report may be as small as five points. Still, that could make a meaningful difference if you’re close to the next tier of scores and are planning to purchase a home or car in the near future.

Above 760, the Benefits of a Higher Score Are Diminishing

As you read this guide and begin to think about the changes you want to make to improve your credit, it’s important to remember that it can take time.

Lowering your utilization drastically can quickly improve your credit, but don’t get discouraged if you don’t see a change overnight. It’s also important to remember that you don’t need to have a perfect credit score of 850 in order to receive the perks of a high score. Many lenders consider a score of 760 to be perfect enough—meaning having a perfect 850 won’t get you a better rate.

Finally, if you don’t have credit and have been rejected for new cards, it can seem impossible to start building credit. If that’s the case for you, you’ll want to look into applying for a secured card. This is an entry level card that requires a deposit as collateral.