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5 Smart Strategies to Boost Your Credit Score

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In a Nutshell

Your credit rating is an important component of your financial profile. Not only can a credit score determine whether you are approved for a loan or credit, but it can also determine important terms of the loan or new credit. The higher the credit score, the better the terms. A good credit score can save you money by helping you qualify for credit with a higher limit and a lower interest rate. This article will provide some helpful information for building and maintaining your credit score and overall credit profile. We’ll discuss five smart and simple strategies for boosting your credit score.

Written by the Upsolve Team.  Reviewed by Attorney Andrea Wimmer
Updated August 23, 2021


Your credit rating is an important component of your financial profile. Not only can a credit score determine whether you are approved for a loan or credit, but it can also determine important terms of the loan or new credit. The higher the credit score, the better the terms. A good credit score can save you money by helping you qualify for credit with a higher limit and a lower interest rate.

Good credit can make getting just about anything that you need easier. This article will provide some helpful information for building and maintaining your credit score and overall credit profile. We’ll discuss five smart and simple strategies for boosting your credit score.

Your Credit Score and What It Says About You

Your credit score is a rating that indicates how responsibly you manage credit. It acts as a snapshot of your financial well-being and creditworthiness. A higher credit score allows you to have access to lower interest rates and other favorable payment terms for new credit. A lower credit score can mean a higher interest rate or even a denial of new credit.

There are three major credit bureaus that track information and produce credit reports, so you actually have more than one credit report. The information in your credit reports from each of the three bureaus can vary. Why? The individual creditors furnishing data to a bureau may also vary. Lenders are not legally required to report account information to all three bureaus. So, it is not unusual for a creditor to report to only one or two of the three credit bureaus. 

Also, your credit score may vary between the three credit bureaus. Why? Each of the credit reporting agencies uses a slightly different approach to calculate your credit score. These methods are ever-changing, which means your score may change even if your credit history hasn’t. Also, if a creditor only reports information to one credit reporting agency, this information will only affect this agency’s credit score.

Checking each of your three credit reports regularly gives you a complete overview of your credit profile. This allows you to easily identify differences between your three reports that could impact your credit score and overall credit profile. This is just one reason why it’s important to regularly review your entire credit portfolio including Experian, Equifax, and TransUnion credit reports and FICO scores.

You can order a free three-bureau credit report to review how you compare across all three bureau reports. Each report shows your personal information, the accounts reported to each bureau, your overall credit usage, and a debt summary. It will also show any hard inquiries and any collections or public records reported.

You can also order a report of your FICO scores for all three bureaus. This will show the factors impacting each of your FICO scores, including payment history, recent credit card usage, your length of credit history, any derogatory items, and credit account types like credit cards and installment loans.

Creditors also develop their own checklists for determining which borrowers are acceptable credit risks. They may define a credit score as good or bad depending on their internal procedures for evaluating consumers for loans and credit scores.

How Your Credit Scores Are Calculated

Credit scores are calculated using a scoring model that analyzes the data in your credit report. There are several scoring models. Each model uses slightly different factors of analyzing your credit report. Different models that use the same factors may weigh the factors differently. Each scoring model tries to predict the likelihood that a borrower will fall 90 days behind on a debt in the next 24 months. A lower score means delinquency is more likely, while a higher score means it is less likely.

FICO and VantageScore are the two scoring models used most by lenders. FICO is the most commonly used. If you have at least one account that is six months old and credit activity during the past six months, you should have a FICO score. VantageScore usually provides a credit score as soon as an account appears on your credit report.

The score ranges for FICO are as follows:

  • A poor score is 300–579.

  • A fair score is 580–669. 

  • A good score is 670–739. 

  • A very good score is 740–799.

  • An excellent score is 800 or up.

More information is available about your FICO score at the myfico website.

FICO Credit Score Factors

Many things can affect a credit score. FICO uses percentages to indicate the importance of a particular category. The categories and their corresponding percentages are as follows:

  • Payment history: 35%

  • Amounts owed: 30%

  • Length of credit history: 15%

  • Credit mix: 10%

  • New credit: 10%

Payment history is the most important factor affecting your credit score. Lenders want to be sure that you will pay back your debt on time when they are considering you for new credit. While one missed payment can negatively impact your score, an overall good credit history can outweigh one or two late credit card payments. 

The following are components of your payment history:

  • Payment information on credit cards, retail accounts, installment loans, mortgages, and other types of accounts;

  • The extent of delinquency on any overdue payments;

  • The amount of money still owed on delinquent accounts or collection items;

  • The number of past due items;

  • Adverse public records like judgments or bankruptcies;

  • The amount of time since delinquencies, adverse public records, or collection items were introduced on your credit report; and

  • The number of accounts being paid as agreed.

The total amount of debts that you owe is a factor related to your use of available credit. Your total use of available credit as measured by your credit utilization is the next most important factor used to calculate your score. Your credit utilization is calculated by dividing the total revolving credit you are currently using by the total of all your revolving credit limits. Lenders prefer a utilization rate of 30% or less. 

The length of your credit history is the next most important factor that affects a credit score. This factor considers the age of your newest and oldest credit accounts, as well as the average age of all your accounts. The longer your credit history, the higher your credit score. 

Credit mix is a factor that considers the type of credit account. It is an indication of how well you manage a wide range of credit products. Your credit mix may be one of the smaller factors in computing your credit score, depending on the credit scoring model used. It determines 10% of a FICO credit score. There are generally four different types of accounts on a credit report: installment loans, revolving debt, open accounts, and mortgage accounts. 

New credit is a factor that reviews the number of new credit accounts that you've opened, as well as the number of hard inquiries made by lenders when you apply for credit. Too many new accounts or recent inquiries can indicate that you are a higher credit risk, which can hurt your credit score.

Steps to Take to Raise Your Credit Scores

There are several strategies you can use to increase your credit score. Decide which works for you based on your current situation. 

1. Keep an Eye on Your Credit Report

The first step to raise your credit score is regularly reviewing your credit reports. Pulling and checking your own credit report is a soft inquiry, which does not hurt your credit score. You can use annualcreditreport.com to obtain a free credit report from each of the three major credit bureaus. You won’t know what information on your report needs repair if you don’t know what’s on your report.

The Fair Credit Reporting Act (FCRA) provides every consumer with the right to obtain a free credit report annually from each of the three major credit reporting agencies. 

Under the FCRA:

  • Each credit reporting agency must provide a free copy of your credit report once every 12 months.

  • Each credit reporting agency must ensure that any personal information they collect is accurat.

  • Each credit reporting agency must allow you an opportunity to fix any errors.

The FCRA also gives you the right to know the name of anyone who received your credit report in the prior year for most purposes or in the last two years for employment purposes. Any company that denies your credit application must provide the name and address of the credit bureau they contacted if the denial was based on information from that credit bureau.

If you disagree with the completeness or accuracy of the information in your report, file a dispute with the credit bureau and with the company that furnished the information to the bureau. Both the credit bureau and the creditor that furnished the information are legally obligated to investigate your dispute.

2. Make Monthly Payments on Time or Early if You Can

Your credit history is the best indicator that lenders have to measure your overall reliability in repaying a debt. Payment history accounts for 35%, more than one-third, of your credit score. As a result, missing the due date for even one monthly debt payment can negatively affect your score. Avoid late payments by making all your monthly payments on time every month. Set up auto pay if possible. If you can’t, sign up for payment reminders to keep you aware of the payment date.

Keep your credit utilization at 30% or lower. Your credit card balances should be no higher than 30% of your credit limit. To calculate your credit utilization ratio, divide your total debt by your total credit limits. Lenders look for a credit utilization ratio of 30% or less since it demonstrates that you wisely manage and do not overuse credit. You may need to reduce your debt amounts to decrease your ratio.

3. Strategically Use New Credit Accounts

If possible, open new credit accounts to help rebuild your credit profile. If you open different types of accounts like a credit card and a revolving credit account, you can improve your credit mix. New credit accounts can also help you lower your credit utilization rate, by increasing your credit limit. Remember this is one part of the formula to calculate your rate. 

Though you’ll have more credit available to use, it’s important not to incur any substantial new charges on these accounts. This works against lowering your credit utilization and can make it harder to stay current with your payments. Only use these accounts to make low-cost charges and pay them off in full each month. This will also help establish a good payment history on your credit report. 

4. Catch Up but Don’t Close Credit Accounts

If you have any credit accounts that are past due, pay what is necessary to make them current. Don’t close any old accounts that you’re not using, since the age of your credit accounts makes up 15% of your FICO score. If you have accounts in collections or that have been charged off, consider your options. Debt settlement, debt consolidation, and a debt management plan are all viable options. You may not have to pay a creditor in full if you can negotiate for a lower payoff. 

Remember that negative credit information like collections accounts and charged-off accounts stay on your report for up to seven years. If any of these accounts are approaching this length of time on your credit reports, it might be feasible to let the time limit lapse. Seven years is considered a reasonable amount of time to establish a good credit history since most negative items disappear from your credit report. But because we all have unique financial circumstances, the time it takes to rebuild your credit history and boost your credit score will vary. 

The length of your credit history is an indicator of your experience using credit. A history of making timely payments indicates you’re likely to make your payments on time if extended credit. You can improve your credit history with a secured credit card or credit-builder loan. You can also improve it by becoming an authorized user on a family member or friend’s line of credit or credit card. Getting a cosigner for a new credit account can also help your credit history.

5. Limit New Credit Inquiries

Whenever a creditor checks your credit, it negatively affects your credit score as a hard inquiry. As a result of this temporary but negative effect, keep new credit inquiries to a minimum. Hard inquiries can't be removed from your credit report. The exception is if they are a result of identity theft. Otherwise, hard inquiries remain on a report for two years. 

Too many hard inquiries will cause lenders to perceive you as a credit risk. Applying for different types of credit like a new credit card or other lines of credit too often is an indicator of financial instability to lenders. Lenders use this instability to conclude that you are a credit risk.

But if you are shopping for a certain type of loan, like a mortgage loan or auto loan, the credit scoring algorithms used by the credit bureaus should recognize this redundancy and ignore multiple inquiries that are made within a relatively short period. So provided that you apply for credit within a 14-day period (or sometimes slightly longer), credit scoring models will consider them as one inquiry.

Soft inquiries usually occur at your request. This can happen when you check your credit report. A soft inquiry can also happen without your knowledge. It can occur when a lender checks your credit rating before sending you a pre-approval offer. These do not negatively affect your score.

Let’s Summarize…

Bad credit can make life difficult. While missing a payment can affect your credit score in a short amount of time, improving your credit score takes much longer. But if you are proactive, you can work to improve your credit more quickly. The time it takes to repair your credit and increase your credit score will depend on the factors that are negatively affecting it along with the strategies you use. Whatever you choose to do to increase your credit score, the effects of any negative information in your credit report will decrease over time.

The following five smart strategies can help you boost your credit score: 

  • Regularly monitor your credit report.

  • Make all monthly payments by the due date.

  • Use new credit strategically.

  • Make new accounts current and keep old accounts open.

  • Avoid new credit inquiries. 

By making smart decisions about how and when you use credit, you can dramatically improve your credit score. 



Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer

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Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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