It’s hard to improve your credit score with a low income. If you don’t have the money to pay off your debts, it can feel impossible. However, there are some steps you can take even if you don’t have the money to tackle your past-due debts.
In 2021, my family was stuck living in hotels and Airbnbs because we couldn’t find a place to rent. There weren’t many rentals to go around, especially since we needed a fairly large size home to fit our five kids and my at-home business. Unfortunately, competition was fierce and we were told by several landlords that if our credit wasn’t good enough for a mortgage, it wasn’t good enough for a rental. There were too many better-qualified applicants.
In order to find a home for my family, I needed to find some effective credit score hacks. The hotel was very expensive, so I didn’t have a lot of extra cash to pay my debts. I had to be creative.
And you know what? It worked! Two months after I started this process, we were able to get into a rental home. Almost 18 months later, we were able to buy our own home. We went from being homeless to being homeowners in about 18 months, thanks in large part to these simple credit score hacks!
In this article, I’ll reveal the process I followed to improve my credit score. Before I get into the details, though, I need you to understand that I’m not a financial advisor or anything. All of the information contained in this article is based on my personal experience. You should always contact a certified financial advisor for personal financial advice.
Step 1: Dispute all Errors
The first step is to get your free annual credit report and check for errors. The Federal Trade Commission estimates that one in five people have an error on at least one of their credit reports. Fixing those errors is one of the fastest and easiest credit score hacks I’ve found!
You are entitled to one free credit report from all three bureaus every single year. You need to be careful, though. There are a lot of scam sites out there that will trick you into paying, so you need to make sure that you order your report from AnnualCreditReport.com. This is the only website authorized by the government to provide orders for free annual credit reports. If you use another website, you’ll usually get tricked into paying for something. You can also call 1-877-322-8228 to order your reports.
Once you get them, you’ll need to review them carefully for accuracy. There are many different types of errors that can appear and some will have more serious consequences than others.
For example, I often find accounts that don’t belong to me on my credit report. That’s because my sister-in-law and I have the same first and last name. We also shared an address at one point in time. Because of that, our credit reports often merge and show two birthdays, two names, and two sets of all the data. Even though it’s an innocent mistake and not identity theft, it can still have a big impact on your score.
Sometimes, a single debt will be listed multiple times. This looks really bad because it makes it look like you owe a lot more debt than you actually do. According to the Consumer Financial Protection Bureau, if this happens to you, you should dispute the multiple listings with the credit bureaus and the companies that reported those debts.
Ultimately, you just need to make sure everything looks right and dispute anything that looks wrong.
Step 2: Send Debt Validation Letters
Debt collectors buy and sell debts all the time, often for pennies on the dollar. This is incredibly frustrating, because it makes it hard to know who you owe and how much you owe. This is why I love debt validation letters – they force the company to prove that you owe the debt and that they have the legal right to collect on it.
When my family was living in a hotel, I sent debt validation letters to every single debt collector that was reporting something on our credit reports. To create these letters, I used the information on the credit report to fill out template letters I found for free on the internet. I printed the letters in the hotel lobby and mailed them. It only cost me the price of postage!
If you want a little more help, you can use the Debt Validation Letter from SoloSuit. Their guided system will have you enter information about you and about the debt, and then they’ll generate a letter that you can print and mail to the debt collector. It currently costs around $30 to have that letter created for you.
Honestly, though, I’ve always written my own and they seem to work okay. You don’t need to buy a letter from SoloSuit unless you want some extra help with that process.
Anyway, after I mailed those letters, a few accounts mysteriously disappeared from our credit report. I guess the company that was reporting the debt couldn’t prove that we actually owed it because I haven’t heard anything since and it’s been a few years now. This was one of the most effective credit score hacks I tried, because it immediately erased a few collections accounts.
Of course, some of the companies responded with the evidence I had requested and I knew that I would need to pay them in order to clear those debts. Others responded with a settlement offer for as low as 60% off the balance owed. Since that was their opening offer, I knew I could negotiate them even lower.
About two months after I mailed those letters, our credit score had increased enough that we were able to get a rental home. That increase all began when with checking my credit report for errors and sending those debt validation letters.
Step 3: Get Credit for Bills You Do Pay
Make sure you’re getting credit for the bills you pay on time. I always paid my rent on time even if I couldn’t pay anything else because I never want to be homeless again. Rent doesn’t usually show up on your credit report, though.
That’s why I love tools like RentReporters and ClearNow. These services will report your on-time rent to the credit bureaus, which can help you build credit just by paying your rent.
These services do cost a little extra. I know that sucks when you don’t have a lot of money to start with, but if you can spare $10-$15 a month, these services can make a big difference.
I’ve used them both and honestly, I love them. After we finally got into our rental, we used both of these tools to improve our credit and we were actually able to buy a house within about 18 months. That was AMAZING for our family – and these tools played a big part in that, because they made sure that our on-time rent was reported to the credit bureaus every month.
RentReporters costs about $10 per month and reports your payments to TransUnion and Equifax. You can set this up on your own, and your landlord doesn’t have to do anything but verify that you paid. They have a one-time enrollment fee of $95, but with that fee they will report up to four years of past rental payments. This was amazing for us because our payments were always on time. If you have paid your rent on time, this can make a huge difference.
Of course, they don’t report to Experian and that’s frustrating. Different lenders pull reports from different bureaus, so it’s really helpful to have your rent reported to all three. This is especially true if you want to buy a house someday, since mortgage lenders usually pull all three reports and then use the middle score to decide if you’re eligible.
That’s why I also used ClearNow, which only reports to Experian. This is a little more difficult, because it requires your landlord to set it up. It also costs an extra $15 a month to report to that one credit bureau, so you’ll have to decide if that’s worth the hassle.
If you’re worried about reporting your rent because you sometimes pay a few days late, don’t worry. RentReporters says that as long as you pay within 30 days of rent being due, it’ll be reported as an on-time payment to the credit bureau.
But rent isn’t the only bill that doesn’t usually show up on your credit report. There are a lot of bills that you probably already pay, like utilities, that only show up on your credit report if they end up in collections. There are a lot of tools out there that claim to report everything from your utilities to your streaming services, but they often come with a lot of fine print that you need to understand.
For example, ExtraCredit from Credit.com can report your rent and your utility bills for $10 a month. I didn’t use this service because it requires you to link a bank account, which they scan for on-time payments to report. I don’t like linking my bank account to things, so I chose not to use this service… but it may be a good option if you really need those utilities reported.
Experian Boost is even more comprehensive but comes with some pretty big disclaimers. This service can report your rent, utilities, cell phone bill and streaming service payments to your credit… but they report it in a way that many lenders just ignore. There are many different scoring models out there, and Experian Boost only counts for a few of them. If you’re trying to buy a house, it’s not going to help you because most mortgage lenders ignore it. Experian also has to comb through your bank account to report those payments, so again that’s not really something that I’m comfortable using.
Debt collectors always make sure that you get reported for your bad payment history, so using these services ensures that you also get reported for your good payment history. That’s why it’s one of my favorite credit score hacks!
Step 4: Don’t Let Student Loans Drag You Down
Unpaid student loans can wreck your credit score, especially if you have a bad payment history. About 20% of student loan borrowers are in default, which means they’ve missed at least 270 days of payments, according to Pew Trusts. That’s one in five student loan borrowers!
The easiest way for low income Americans to stop their student loans from wrecking their credit is to apply for an Income Driven Repayment Plan. These plans determine your payments based on your income. The lower your income, the lower your payment. Millions of borrowers qualify for $0 per month payments – and you don’t have to worry about late payments when you don’t owe a payment at all!
Under the SAVE Plans, a single borrower who earns less than $32,800 a year will not have a student loan payment at all. The income limits vary based on household size, so someone in a household of four could earn up to $67,500 and still not owe anything toward their student loans.
It’s easy and free to apply for an IDR plan at StudentAid.gov/IDR. However, if you want help figuring all this out, you can also call the Student Loan Relief helpline by our sponsor CareConnect USA at 888-201-0431.
When I first applied for my IDR, I was a few payments behind on my loans. I was fresh out of college and I was caught off-guard when my forbearance period ended. The lovely people that I spoke to at the call center were able to help me set up a $0 a month payment plan and remove those past-due payments from my credit report, because I shouldn’t have owed them at all. I’m not sure if that’s something they can do for everyone but it never hurts to ask.
If your student loans are impacting your credit, please contact your loan servicer directly and let them know about your situation. See if you qualify for an IDR – and if you do, ask them to remove all the past-due payments from your credit report since you never should’ve owed them at all. If they’re able to do that for you, like they did for me, then it can do wonders for your credit score.
Step 5: Strategize for Success
Going forward, you’ll be able to build your credit score a lot better if you understand how credit is calculated.
Think of your credit score as a pie chart cut into five slices. Each slice represents a part of your financial behavior. The biggest slice, almost a third of the pie, is your payment history—do you pay your bills on time? The next slice, also a big one, is how much you owe compared to your credit limits . The rest of the pie is split into smaller slices: the length of your credit history, the types of credit you have (like a car loan or credit cards), and any new credit accounts you’ve opened. Put these slices together, and you get your credit score!
Now, here’s where it gets a bit tricky—there are different ‘recipes’ for this pie, called scoring models. Different companies might weigh the slices a little differently. Some might care more about your payment history, while others might focus on how long you’ve had credit. But don’t worry too much; most of these models look at the same basic ingredients.
It’s important to understand all the parts of the pie because they work together in harmony. Think of it like baking; even if you have the best flour in the world, it won’t make a great pie if you’re missing sugar or have bad apples. Similarly, even if you’re doing really well in one ‘slice,’ like always paying your bills on time, you won’t get the perfect credit ‘pie’ if you’re lacking in the other areas. Your credit score will only get to a certain point if you’re only focused on one part, even if you’re doing that one part perfectly. To get the best score possible, you have to pay attention to all parts.
Payment History
Payment history is pretty straightforward. If you pay your bills on time, your credit score goes up. If you don’t, it goes down.
Late payments generally aren’t reported until you’re at least 30 days late, so do your best to pay before things get reported.
If you’re struggling to pay your bills on time, please look at the articles on our website for ways that you can get help. We have reported on organizations that can help you with your rent, utilities, phone bill, transportation costs and so much more.
Amounts Owed
The amount you owe compared to the amount of credit you have available is also a major factor. If you have a $500 credit card and you’re carrying a $475 balance, that’s going to have a negative impact on your credit score.
Paying that balance down can help your score go up – and it can also save you from paying costly interest payments along the way. I know this is hard to do when you’re barely scraping by, but please try to save your credit cards for emergency situations.
Again, you can use the resources on our channel to help offset your other costs, like utility and internet bills, so that you can save money on your expenses.
Type of Credit
The type of credit you have also makes a difference. Ideally, credit bureaus want to see a mix of credit types, like credit cards, vehicles, and home loans. If you only have one type of credit, that’s going to reduce your score.
Be very careful with this. Minimum payments can destroy a low income budget.
When we wanted to apply for our first mortgage, my husband and I were told that we needed to diversify our credit. Our lender advised us to open 3-5 new credit lines. It worked and we were able to buy our house a few months later because our credit score had improved… but a few months later, we discovered we couldn’t maintain the payments.
Homeownership was a lot more expensive than we had expected and we couldn’t pay the minimum balances on all the lines we’d opened. As a result, our credit was wrecked… and that’s why so many years later, we found ourselves living in a hotel because our credit was so bad we couldn’t get a rental.
It was that advice to diversify our credit and our inability to manage that debt effectively that left us homeless for a while… so be careful.
Length of Credit History
The length of your credit history also matters. This is why it’s almost always a bad idea to close old accounts that are in good standing. If the account is still open and reporting a great payment history, just leave it.
When my husband was in the military, we were approved for an MWR card that didn’t appear to work anywhere. We never figured out how to use it – thank goodness – and that little $500 credit card reported a positive credit history for almost 10 years before it was closed for nonuse.
This card was often the only good payment history we had, and it made a huge difference for us. If we had closed it just because we couldn’t use it, it would’ve hurt us.
New Credit Inquiries
Your credit history also suffers when you apply for new credit, because your scores usually drop when you get hard inquiries.
A lot of retailers will offer you a discount on your purchase if you apply for their credit card even if you’re not approved. When you’re trying to save money, this can be very tempting… but it can damage your score so be careful.
Watch Out for This!
And if all this sounds overwhelming and you just want to stop using credit altogether, you need to be careful about that, too.
I have some dear friends who moved to India for a few years. Before they left, they sold everything, paid off all their debts and closed all their credit lines. Despite the fact that they were extremely financially responsible, this meant that when they returned to the States they didn’t have a credit score at all. Like… none. And that made it hard to get into a rental, impossible to buy a house, difficult to get another car, and so on. It was really frustrating to their family.
Unfortunately, our culture is so credit-dependent that not having a score at all can seem as bad as having a bad score. There’s really no way to avoid your credit score without consequences.
Why You Need These Credit Score Hacks
Now, you’re probably thinking I’m crazy, right? Surviving on a low income is hard enough without worrying about your credit score. You probably think it’s too complicated or that I’m about to sell you something expensive… but that’s not the case. Look, I’ve been there. I’ve lived the low income life. I know that you don’t need another clueless guru to tell you to stop buying coffee and pay your debts instead. That’s not what we do here.
I’m just worried about you because this is a trap. You struggle financially, so you end up with a bad credit score, and then that score keeps you stuck in a cycle of poverty that is hard to beat. Landlords won’t rent to you. Employers won’t work with you. Everything costs more. And it’s not fair.
For example, new friend has been really struggling with this. Her family has been homeless for a few years now. When she finally made it into a homeless shelter, the shelter told her she could only stay for a few months and only if she was applying for a certain number of apartments every week… but her credit score was wrecked from years of financial struggle so she couldn’t get accepted anywhere. It was so frustrating trying to get the money to cover application fees for apartments that wouldn’t even consider their applications, especially when that money could’ve been used to pay off debts that would have improved her scores and actually solved the problem she was facing with getting housing.
But it’s not just housing, either.
Reddit is full of stories of people who have been denied jobs because of bad credit. One particular poster described how they came back from a fantastic interview where everything had lined up perfectly… only to find out that they were shut out of the job because their credit score was impacted by student loan balances. In their words, “I can’t get a job because I’m in debt and I’m in debt because I can’t get a decent job.”
If you drive a car, your credit score can hurt your car insurance rates too. A recent study by the Consumer Federation of America found that drivers with bad credit and a clean driving record pay about $905 more per year on average than people who had a DUI with excellent credit. Bad credit can literally make you pay more than driving under the influence.
Obviously, your credit score matters even if you aren’t trying to buy a house or get into a rental home. It can impact everything from your employment to your utility costs. That’s why I recommend following the steps in this article to improve your score.
Summary
In this article, we’ve reviewed five credit score hacks that helped take me from homeless to homeowner in 18 months. These tips and tricks include disputing errors, sending debt validation letters, using a service like RentReporters to make sure that your rent is reported to the credit bureaus, and more. All of tips and tricks in this article are based on my personal experiences and results may vary. For financial advice, you should always consult a qualified professional.
Nicole Thelin
Nicole is the founder and lead researcher of Low Income Relief. After a personal experience with poverty and homelessness following her husband's sudden medical discharge from the U.S. Army, Nicole discovered the life-changing impact of community resources. This experience ignited her passion for empowering others to navigate similar crises. Nicole launched her writing career at age 16, working for various newspapers and publications. Her commitment to in-depth research and accessible content has been recognized by Google for Publishers and other industry leaders. For over 20 years, she has applied her investigative skills to uncover the most helpful, up-to-date information on benefits programs and community resources, ensuring Low Income Relief maintains the most extensive resource databases available.