Struggling with debt can feel overwhelming, especially when you’re trying to raise your credit score. But not all debt impacts your score the same way. Some balances should take priority because they have a bigger effect on your credit health.
The key is to focus on debts that improve your credit score the fastest—whether by lowering your credit utilization, strengthening your payment history, or eliminating high-interest balances. Let’s break down how to decide which debts to tackle first and the smartest strategies for paying them off.
5 Smart Ways to Pay Off Debt Faster to Improve Your Credit
Paying off debt isn’t just about reducing what you owe—it’s also one of the fastest ways to improve your credit score. But not all debt affects your score the same way. Credit cards, loans, and collections each impact your credit differently, so choosing the right payoff strategy can help you see results faster.
By focusing on the right balances and using a smart repayment plan, you can lower your credit utilization, reduce negative marks, and build a stronger credit profile. Here are five ways to tackle your debt while improving your credit score at the same time.
1. Check Your Credit Report and Identify Problem Debts
Before deciding which debts to pay off first, start by reviewing your credit report. This will show you which accounts are hurting your credit score the most, allowing you to prioritize the ones that will have the biggest impact.
Get Your Free Credit Report
You can access your credit report for free once a week from each of the three major credit bureaus—Experian, Equifax, and TransUnion—at AnnualCreditReport.com. Some credit card companies and banking apps also offer free credit score tracking, which can help you monitor changes as you pay down debt.
Start by Disputing Any Inaccuracies
Errors on your credit report can unfairly lower your score. If you find accounts that don’t belong to you, incorrect late payments, or other inaccurate information, disputing them could result in their removal. If a negative item is successfully removed, it no longer needs to be a priority for repayment, since it will no longer impact your credit score.
Focus on Debts That Are Dragging Your Credit Score Down
Not all debt is equally harmful to your credit. As you review your report, pay close attention to:
- Late Payments: Any account with a history of missed payments lowers your credit score significantly.
- Charge-Offs & Collections: These show lenders that you’ve had serious trouble managing debt.
- High Credit Card Balances: If your credit utilization is too high, your credit score may suffer even if you’re making payments.
Once you’ve identified the most damaging debts and addressed any errors, you’ll have a clearer plan for tackling them in a way that strengthens your credit score.
2. Focus on High-Impact Debts
Not all debt affects your credit score the same way, so paying off the right balances first can help you see improvements faster. Some debts hurt your score more than others, especially those tied to credit utilization and payment history.
Credit Card Balances Impact Your Credit Score the Most
Your credit utilization—the percentage of available credit you’re using—plays a major role in your score. Carrying high balances, especially over 30% of your limit, can lower your credit score even if you make payments on time. Paying down maxed-out credit cards can give you a quick boost.
Late Payments and Collections Lower Your Credit Score
Payment history is the largest factor in your credit score, and even one missed payment can cause a drop. If you have past-due accounts, bringing them current should be a top priority. Accounts in collections or charge-offs also hurt your score, though their impact lessens over time. Paying off newer collections may help improve your credit score, but older ones may not be worth prioritizing unless required by a lender.
By focusing on these high-impact debts, you can start seeing credit score improvements while reducing what you owe.
3. Use a Debt Payoff Strategy That Works for You
Paying off debt takes discipline, but choosing the right strategy can make it easier to stay on track. The best method depends on your financial situation and what keeps you motivated.
Snowball Method: Pay Off Small Debts First for Motivation
With the snowball method, you start by paying off your smallest debt while making minimum payments on everything else. Once that debt is gone, you roll the payment into the next smallest debt, creating momentum. This approach works well if you need quick wins to stay motivated.
Avalanche Method: Pay Off High-Interest Debts First to Save Money
The avalanche method focuses on paying off debts with the highest interest rates first. This strategy saves you the most money over time, since high-interest debt—especially credit cards—can grow quickly if left unchecked. If cutting down on interest costs is your priority, this is the better option.
See also: Debt Snowball vs. Debt Avalanche: Which is Right for You?
Focus on Lowering Credit Utilization for a Faster Credit Score Boost
If your goal is to improve your credit score as quickly as possible, prioritize paying down credit cards with high balances. Lowering your credit utilization ratio can lead to a noticeable score increase, often within a billing cycle. This approach is especially useful if you’re preparing for a major financial move, like applying for a mortgage or car loan.
Each strategy has its benefits, so choose the one that aligns with your financial goals and keeps you committed to paying off debt.
4. Make Budget Adjustments to Free Up Extra Cash
Paying off debt faster often comes down to making room in your budget. Small adjustments can add up, giving you more money to put toward your balances. The key is to be intentional about where your money goes.
Cut Unnecessary Expenses and Redirect That Money Toward Debt
Take a close look at your spending and find areas where you can cut back. Dining out, subscription services, and impulse purchases are common places to start. Even small changes—like brewing coffee at home or canceling unused memberships—can free up extra cash to put toward your debt payments.
Avoid Taking on New Debt While Paying Off Existing Balances
If you’re working hard to pay down debt, adding new balances can slow your progress. Try to avoid relying on credit cards unless necessary, and think twice before taking out new loans. Sticking to a budget and using cash or debit for everyday expenses can help keep your debt from growing while you focus on paying it down.
Adjusting your budget doesn’t mean eliminating everything you enjoy—it just means being more intentional about spending so you can reach your financial goals faster.
5. Consider Professional Help If You’re Struggling
If your debt feels overwhelming, or you’re struggling to make progress, professional help can provide guidance and structure. There are several options depending on your situation.
Credit Counseling and Debt Management Programs Can Help
Nonprofit credit counseling agencies offer free or low-cost advice to help you create a plan for paying off debt. Some also provide debt management programs, which can consolidate multiple debts into a single payment with potentially lower interest rates. This can make repayment more manageable while keeping your accounts in good standing.
In Some Cases, Credit Repair Services May Be an Option
If errors on your credit report are holding back your score, a reputable credit repair service can help dispute inaccurate information. While they can’t remove legitimate debts, they can assist with challenging unfair or incorrect negative marks that could be hurting your credit.
Getting professional help doesn’t mean giving up control—it’s about finding the right tools and resources to get back on track. If you’re struggling to manage debt on your own, these options can make a big difference in your financial recovery.
Final Thoughts
Paying off debt the right way doesn’t just reduce what you owe—it also helps improve your credit score. By focusing on high-impact debts, using a smart payoff strategy, and making room in your budget for extra payments, you can start seeing progress faster.
Not every method works for everyone, so choose a strategy that keeps you motivated. If your main goal is improving your credit score quickly, lowering credit card balances should be a priority. If saving on interest is more important, targeting high-interest debts first will help you pay less over time.
Most importantly, stay consistent. Even small steps toward paying off debt can make a big difference over time. And if you ever feel stuck, professional help is available to provide guidance and support. The sooner you take action, the sooner you’ll be on your way to better credit and financial freedom.
