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Published: Mar 15, 2024 9 min read

A good credit score can save you a lot of money when it’s time to take out a loan. Whether you need a mortgage, student loan or personal loan, your score will factor into how much you pay in interest. Plus, a strong credit score can make it easier to find an apartment, get insurance and qualify for some of the best credit cards.

Read on for some strategies that can help you increase your credit score and improve your financial situation.

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How to raise your credit score

The two primary credit scoring models are the Fair Isaac Corporation (FICO) score and VantageScore. Most lenders use the FICO model, while VantageScores are often offered to consumers for free through credit monitoring services. However, both scoring models evaluate similar financial factors and use a numerical range from 300 to 850.

Your credit score is extremely important because it can determine whether you’re approved for a loan or credit card, and the type of rates you’ll get. Lenders will offer their best rates and terms to consumers with high credit scores; conversely, borrowers with poor credit scores will either have trouble being approved or pay much higher interest rates.

Here are some steps you can take to raise your credit score:

1. Pay your bills on time

Your payment history is the most influential factor in your credit score. From a lender’s perspective, an established history of on-time payments is a good indicator that you’ll handle future debts responsibly. This makes paying your bills by their due date the best way to improve your credit score.

If you’ve had a history of late payments, the best thing to do is to make timely payments now and wait for the late payments to drop off from your report. Late payments and delinquencies such as collections, repossessions, foreclosures and settlements stay on your report for seven years, and bankruptcies for no longer than 10.

However, if some of those reported payments are incorrect or unfairly reported, you can also dispute them with the credit bureaus or contact one of the best credit repair companies to handle it for you.

2. Keep your credit utilization rate low

Your credit utilization ratio is a percentage that represents how much of your available credit you’re using. You can calculate it by dividing your credit card balances by your total credit limits. For example, if you have two cards each with a $5,000 limit and owe $500 in each one,your credit utilization ratio is $1,000 divided by $10,000, or 10%.

Many experts recommend keeping your utilization ratio below 30%. John Ulzheimer, credit expert, formerly of FICO and Equifax, says you should aim for 10% or less, if possible. “The higher that ratio, the fewer points you’re going to earn in that category, and your scores are absolutely going to suffer,” he says. “In fact, people who have the highest average FICO scores have a utilization of 7%.”

The date your credit card provider reports to the credit bureaus may also impact your utilization rate. Ulzheimer points out that FICO’s scoring systems don’t differentiate between those who pay in full each month and those who carry a balance. Your utilization rate at the time your issuer reports to the credit bureaus is what's used for your score.

3. Leave old accounts open

While many people’s first instinct is to cancel credit cards so as to eliminate the temptation to use them, it’s important to note that closing old credit card accounts can actually lower your score.

Closing a credit card, even if you don’t use it, lowers your overall available credit limit. This consequently increases your credit utilization ratio and can lower your score, especially if you’re carrying balances on your other cards.

Additionally, you’re better off keeping a card open if you’ve been paying it on time. Its records may actually help your credit score by showing lenders you have a history of responsible debt management.

“An account that’s paid in full is a good thing; however, closing an account isn’t something that consumers should automatically do in the hopes that it will positively impact their credit score,” says Nancy Bistritz-Balkan, vice president of communications and consumer education at Equifax. “Having an account with a long history and solid track record of paying bills on time, every time, are the types of responsible habits lenders and creditors look for.”

4. Only apply for credit when absolutely necessary

Every time you apply for a new line of credit, the lender runs a hard inquiry on your credit report. Such credit inquiries lower your score temporarily. With this in mind, applying for a new credit card just to see if you get approved or because you received a pre-qualified offer is not a good idea.

A single hard credit check might only slightly ding your credit score. However, a string of hard inquiries could signal to lenders that you’re facing financial struggles or taking on too much debt. The effects of a hard credit pull on your score, according to a representative of TransUnion, can last up to 12 months.

If you do need to apply for a new credit line, improve your likelihood of approval by comparing lender requirements before applying. If possible, get a pre-qualification, as in many cases these result in a soft rather than hard credit pull. Soft pulls don’t affect your credit score.

When you’re shopping for a mortgage, auto loan or personal loan, keep hard inquiries to a minimum by comparing interest rates within a short time period. Applications for the same type of loan within a time frame of around 14 days only appear as a single hard inquiry on your report.

5. Consider a secured credit card

If you have a short credit history, a secured credit card can help you establish credit for the first time or improve a bad credit score if used responsibly. Credit card companies have lenient requirements for secured cards since borrowers need to provide a cash deposit as collateral.

Secured cards may charge an annual fee, and their interest rates are often higher when compared to traditional credit cards. However, if you pay off your full balance each month, you’ll avoid piling interest charges and establish a timely payment record.

6. Monitor your credit score

Monitoring your score’s fluctuations every few months can help you understand how well you’re managing your credit and whether you should make any changes. You can check your credit score as often as you like since it results in a soft inquiry, which doesn't lower your score the way hard inquiries do.

Some financial institutions provide a free credit score through your online account or with your monthly statement. You can also use a credit monitoring service. These services simplify the process by sending an alert if your score changes, and they usually point out recent actions that might have caused the change.

Note that credit monitoring services usually include the VantageScore, which are not commonly used by lenders. However, checking your credit score is still a useful financial practice that might even alert you of possible identity theft.

7. Seek professional credit counseling

A professional credit counselor can evaluate your financial situation and offer advice on how to improve your credit score. They often work for non-profit credit counseling agencies and can provide free financial education and workshops.

When you meet with a credit counselor, they’ll go over your credit history with you and determine what factors are hurting your credit and how to fix it. They may also recommend a budget or a debt management plan to prevent delinquencies or bankruptcies.

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Improve your credit score FAQs

Why does a good credit score matter?

A good credit score can help you secure better interest rates and improve your odds of approval when you apply for a mortgage, auto loan or credit card. It could also help you get a lower premium on insurance policies and, since many landlords are now running credit checks as part of the rental application process, can also increase your chances of being approved for a rental property.

How is your credit score calculated?


There are several credit scoring models, but they consider similar factors, including your credit mix, recent credit applications, credit history length, payment history, existing debt levels and credit utilization rate (or ratio).

Each model weighs each factor differently. However, they usually place higher importance on your payment history and credit utilization.

How long does it take to rebuild credit?

The time needed to rebuild your credit score depends on what lowered it in the first place. If closing a credit card account dinged your score, it may take only a few months to see improvement. However, if you filed for bankruptcy or had accounts sent to collections, it can take years to recover, and the negative item can remain on your credit report between seven to 10 years.

How often should I check my credit score?

How often you should check your credit score depends on your goals. Most experts recommend checking your credit score annually if you’re not applying for new credit lines or if you aren’t too concerned about changes. Otherwise, you might consider checking it monthly to monitor how your financial decisions are affecting your score.

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