In addition to making or breaking your chances of obtaining loans and lines of credit, your credit score can affect where you live, how much you pay for car insurance and even whether or not you get hired. A three-digit numerical representation of creditworthiness, a credit score is based on an analysis of a person’s credit history, and it’s used by lenders to determine how likely they are to repay a loan.

In 2014, the average credit score in the U.S. was 693. Around 48.9 percent of Americans boasted a prime credit score of 680 or higher, but 34.2 percent reported a subprime score of 620 or less. If you fall into the latter category and want to do something about it, keep reading for some useful tips.

1. Set Up Payment Reminders

Late and missed payments take a drastic toll on your credit score — and they stay on your report for up to seven years — so it’s crucial to avoid them at all costs. Set up payment reminders for your various accounts to avoid inadvertently paying things late, which can happen to the best of us. You can set up reminders through your smartphone’s built-in reminder utility, through budgeting software or through credit card and banking apps.

2. Pinpoint What’s Hurting Your Credit Score

Knowing that you have a bad credit score is one thing; knowing what makes it that way is another. You can’t fix the situation without understanding why it’s happening, and it pays to familiarize yourself with the factors that affect your credit score, and how much they affect it.

Payment history accounts for about 35 percent of your credit score. Other factors include the following:

  • Debt level: 30 percent
  • Age of credit: 15 percent
  • Types of credit or credit mix: 10 percent
  • Number of credit inquiries: 10 percent

3. Don’t Close Unused Credit Cards

After paying off a credit card, your first instinct may be to close it. However, it is generally best to keep unused credit cards open — even if you don’t plan on using them much or at all.

For one thing, having an open card with no balance helps to lower your credit utilization rate; this has a major impact on the debt that’s reported in your report. For another, closing a card lowers the average age of your credit. The older the card, the bigger the impact to your credit score. Unless the card imposes huge fees or other inconveniences, keep it open.

4. Negotiate with Your Bank

If high account balances are bringing down your score, and you can’t feasibly pay them down to a more manageable level, you can always try negotiating with your bank or creditors. Ideally, try to negotiate a deal where 30 to 50 percent of your balance is forgiven in exchange for having the debt removed from your report. If they won’t do that, ask them to mark it as “paid” or “paid in full.” You can also try negotiating a lower interest rate, a new payment date, or a reduction in the fees that have already been assessed.

5. Don’t Open New Credit Cards That You Don’t Need

As your credit begins to improve, you’re apt to start receiving more credit card offers. Resist the urge to open new cards unless you legitimately need them; getting a 10-percent discount by opening a store card isn’t generally worth it, for example.

New credit cards pose many problems for people who are trying to improve their scores. The inquiry alone will cost you three to five points. Opening a new card lowers the average age of your accounts, which negatively impacts your credit. If you immediately make a big purchase with that new card, your credit utilization rate is likely to take a big hit too.

6. Check Your Report for Errors

Even if your credit history includes legitimate issues that explain your low score, it could also contain errors that will make it even harder for you to bring it up. Even people who have solid scores should check theirs regularly for errors. According to a 2012 FDIC study, one in five Americans’ credit reports contain errors.

Thanks to the Free Credit Reporting Act, all Americans are entitled to one free copy of each of their three reports per year. These can be accessed via If you find errors, report them right away and follow up to ensure that they are resolved.

7. Address Collections Accounts

If your credit report includes active collections accounts, take steps to resolve them if you can. While checking your report for accuracy, in fact, you may discover collections accounts that should have dropped off long ago or that were never valid in the first place.

For legitimate collections accounts, contact the collection agency to see if they will remove the item in exchange for payment in full. If they agree to this, make sure to put it in writing. Note that many collection agencies are unwilling to do this.

8. Get a Credit Card

This last piece of advice may seem counterintuitive, but it makes sense if you have a low credit score and no credit cards. Opening just a single credit card is a great way to start establishing a positive payment history.

Of course, if your credit is bad, you may not be able to open any regular credit cards. In that case, try opening a secured credit card instead. Secured cards are backed up by deposits that are made by account holders. Typically, your credit limit is equal to however much money that you have deposited. Confirm that a secured card reports to the three credit bureaus before opening one, and then use it with care to slowly but surely rebuild your credit.