How to Raise Your Credit Score: 7 Steps That Work

Two habits do most of the work: paying every bill on time and keeping your credit card balances low compared with your limits. Under FICO’s model, those two factors make up about 65% of your score. The other steps below help at the edges. None of them work overnight, but lowering card balances can show up within a month or two.

1. Never miss a payment again

Payment history is the biggest single factor, about 35% of a FICO score. One payment that’s 30 or more days late can stay on your report for seven years.

Set up autopay for at least the minimum on every card and loan, then pay more by hand when you can. Autopay is your safety net for the month you forget. If you’ve already fallen behind, get current as quickly as possible; the damage gets worse at 60 and 90 days. What Happens After a Missed Credit Card Payment? walks through the stages.

2. Bring your card balances down

“Amounts owed” makes up about 30% of a FICO score, and the key piece is credit utilization: your card balances divided by your card limits. Owing $2,700 on $3,000 of limits (90%) looks much riskier than owing $300 (10%).

There’s no magic number, but lower is better, and people with the highest scores tend to use only a small share of their limits. Two tricks help:

• Pay before the statement closes. Your issuer usually reports the balance shown on your statement. Pay most of it a few days before the closing date and a lower balance gets reported, even if you use the card heavily.
• Spread out large purchases instead of maxing out one card.

Utilization has no memory. Once balances drop and are reported, your score can recover within a month or two.

3. Check your credit reports for errors

Pull your reports from all three bureaus. They’re free every week at AnnualCreditReport.com. Look for late payments that weren’t late, accounts that aren’t yours, and balances that are wrong. Fixing a genuine error is one of the few ways to raise a score quickly. How to Dispute a Credit Report Error explains the process.

4. Keep old accounts open

Length of credit history counts for about 15%. Your oldest card is quietly helping you, so unless it has an annual fee you can’t justify, keep it open and use it for a small purchase now and then so the issuer doesn’t close it. What Happens to Your Credit Score When You Close a Card? has the details.

5. Apply for new credit only when you need it

New credit is about 10% of the score. Each application usually triggers a hard inquiry, which costs most people fewer than five points and stops counting after a year. Opening several new cards in a short time also lowers the average age of your accounts. If you’re shopping for a mortgage or car loan, do it within a couple of weeks; FICO counts those rate-shopping inquiries as one. Hard vs. Soft Credit Inquiries explains how.

6. Get credit for bills you already pay

Experian Boost, a free service, lets you add on-time utility, phone, streaming, insurance and some rent payments to your Experian credit file. It only counts on-time payments, so it can’t hurt, but it only affects scores based on Experian data. Some landlords and rent-reporting services can also report rent payments to the bureaus. Results vary, and the effect is usually larger for people with thin files.

7. Starting from scratch? Build a file

If you have little or no credit history, you need at least one account reporting to the bureaus. The usual first steps:

• A secured credit card. You put down a deposit, often a few hundred dollars, which becomes your limit. Use it for a small recurring bill and pay it in full every month.
• A credit-builder loan from a credit union or community bank. The loan amount sits in a savings account while you make payments, and you get it at the end.
• Becoming an authorized user on a family member’s well-managed card. Can Becoming an Authorized User Help Your Credit? covers the pros and cons.

What doesn’t help

Checking your own score doesn’t hurt it. Carrying a balance doesn’t help it; paying in full is better for both your score and your wallet. And be skeptical of anyone who charges to “repair” your credit. They can’t legally remove accurate negative information, and anything they can legitimately do, you can do yourself for free.

Understanding Credit Score explains how all these factors fit together.

Sources

• myFICO: What’s in your credit score
• myFICO: Does checking my credit score lower it?
• Experian: What is Experian Boost?
• FTC: Free credit reports

This article is for educational purposes and is not financial advice.