How to Raise Your Credit Score

One of the most common credit score questions I find in my search results are “how to raise my credit score?” and “how to raise credit score?” People desperately want to know how to raise their credit score number. Understandably they want a good score so they can get a good mortgage rate, rent a house, or get better interest rates on the loans they do take on.

A slight increase in your credit score can save you thousands on a home mortgage if you’re able to move the interest rate available to you by just a few percentage points. So that explains how a good credit score can help. But that’s not why you’re here. You want to raise your credit score. To do so requires that you understand what makes up your score.

Factors Making Up My Credit Score

The following 5 factors are what the Fair Issac corporation takes from the 3 credit bureaus to calculate your credit score:

  • Payment History
  • Amounts Owed
  • Length of Credit History
  • New Credit
  • Types of Credit Used

Here’s how they breakdown from a percentage point of view:

Now that you understand the factors, here’s how to improve each of those factors.

Ways to Improve My Credit Score Factors

Improve Your Payment History – To improve your payment history, just keep making your payments on time. Set yourself a reminder to pay all your bills on a certain day of the month. It’s also possible that your credit report is showing incorrect payment history or the wrong history. Go over your credit reports with a fine tooth comb and ensure the information is accurate. If not, contact the bureaus to fix your credit report.
Decrease Your Amounts Owed – If you have out standing revolving debts (i.e. credit cards), make sure you pay them off each month. If the balances are large, try to pay them down using any extra money you have. Similar to above, be sure to take a look at your credit reports to ensure the proper balances are being reported.
Lengthen Your Credit History – There’s no fast way to do this. Just make sure your credit report shows all your old loans. You want to get credit for your history.
Don’t Apply for New Credit – Limit the number of credit applications you make, or simply stop applying for credit all together.
Increase the Types of Credit Used – There are two major types of credit: revolving (i.e. credit cards) and installment (i.e. auto loans). Fair Issac likes to see both and in multiples from different sources. I’m not going to advise you to go out and take on new debt to raise your score. But I will remind you to check your credit reports to ensure that the correct information is presented.

Learn more about boosting your credit score (video link) from the credit score expert, Liz Pulliam Weston.

No Quick Fix to Raise Credit Score

If you’ve come this far, you probably realize that there are no real quick fixes with your credit score. It will take time to improve. Even fixing credit report errors is going to take a while. But that’s not to discourage you. It’s meant to encourage you to get started now with your improvements.

See Your Credit Score

Get peace of mind. Check all three of your bureau credit scores. Use this free trial to see your free credit score online right now.



Last Edited: February 23, 2016 @ 1:06 am The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. Thanks for the insight! I am doing well on all of the areas except “payment history” as I am just starting out so hopefully as time goes on it will continue to go up.

    I am not sure about other places but the credit union I am a part of (as long as I have some kind of credit with them) keeps my credit score on file and it is updated every 3 months. Maybe other financial institutions do the same? It’s a easy way to get it for free.

  2. @Meghan – Yeah, the FICO is definitely biased against younger people. Nice tip about the credit union. I know more are more financial institutions are offering credit reports as a free service. The new charge card from Amex, the ZYNC card, gives you access to your reports and score once annually.

  3. Like Meghan, I’m doing in good in most areas except payment history as well. I’m a relatively new card user, but this should just improve with time.

    Another factor that I think has an effect on your score is your utilization ratio. If you increase your credit line, this should have a positive impact on your score.

    If you have a Citibank card, from time to time they have a link online where you can automatically increase your credit line. This is one of the biggest reasons I like this card.

  4. I have been struggling to get a low credit score back up. It’s a challenge but it’s coming along. Right now I’m at a stand still. I need 12 more points to increase to qualify for a rural development loan. I won’t budge and there is nothing else to work on to improve it. I don’t know what else to do to get the score up. I’m just want to give up and quit trying so hard. I will rent for ever if so.

  5. I don”t know why my credit score is so low. I ordered the three credit reports and I don’t have any late payments or owe any money to a company, I have a pretty clean credit report but my score doesn’t show that. Do you have any ideas as to why that could be?

  6. I was told that if you don’t use your credit, then that would hurt your score as well. If you have credit cards, use them once a month and pay off that bill. Also if you don’t have more than one type of loan, IE an auto or installment loan and a credit card, go to your bank and get an installment loan for a small amount and pay it off on time. (you can even get a secured loan from the bank, it shows as a regular installment loan on your credit,), it can be for $200 or $500 dollars and pay it off on time.

  7. Once opening a secured loan, how long would it take to really show an increase in my score?

  8. @wendy – not really sure. here’s some advice from the Mint.com answers forums: http://www.mint.com/blog/how-to/improve-my-credit-score-06232010/ Scroll to the bottom.

  9. TamraEhler says:

    Actually the % of these factors are different for different people.They are only average.