Build credit after paying off debt

[Hecopisk]

After some pretty bad financial decisions, my credit has taken a dive over the past years (student loans, hospital bills and a utility bill) However (!) I just payed off my last account in collections and i am now debt free (WAHOO!!) Just paying these debts raised my credit score 25 points, but I'm still sitting in the mid 500s. What can I do now, to build my score higher? I have no credit cards or other open accounts.

[Anonymous]

With no credit cards or other open accounts, you have limited ways of improving your score.  You have to have credit and show that you can handle it for the scores to go up.

If you now have a good history of utility payments, then Experian Boost could help you (www.experian.com/boost), but that only helps you if find creditors that only look at Experian.  If the Boost works to improve your score at Experian, you could theoretically also freeze Equifax and TransUnion and see if new creditors will approve you only based upon the Experian credit score.

[Opus 17]

I assume you have a history of late payments?  Because it should help your score if you paid on time, even if it took a long time to pay things off.  

You might try picking up one no-fee credit card and use it for small purchases, and pay it in full every month.  A history of on-time payments in full will help you.  But getting a new card will drop your score at first, so be aware of that.  

Also, the length of your credit history is important.  If you have a credit card account that you've had for years, don't close it, even though it is paid off (and even if you misused it for a while).  Leave it open, but with no charges, or use it for your small purchases that you pay off in full every month.  

Of course this requires discipline not to fall behind again.

The other radical answer is to only buy what you can afford, save for big purchases, and never borrow again. Then it doesn't matter what your score is.