Raising Your Credit Score

Credit score.

Something that many people, myself included, know/knew very little about going into their twenties.

However it is a term that has A LOT of control over your life and knowing about it in your twenties, can save you tons of money moving forward. If you want to buy a car or a house and need to take out a loan, your credit score plays a large factor.

Higher credit score = Lower interest rates 

Not only does your score determine your interest rate on your loan (which can save you thousands of dollars depending on your percentage), it will also determine if you are even eligible for a loan in the first place! If your score is too low many banks will refuse to give you any loan at all.

Too low = No loan

So how do you raise your credit score? Well, I think its pretty obvious i’m going to tell you based on the blog title. To start I will give you the generalized breakdown of the credit score meter – Your credit score can range anywhere from 300 to 850.

(PSA: This blog is based on FICO)

Credit Score Meter

Excellent: 750 And Above

Good: 700 – 749

Fair: 650 – 699

Poor: 550 – 649

Bad: 550 And Below

So lets say your current score falls into the fair range, and you want to move up to good or even Excellent – How do you do that?

Bad news: There are multiple factors that effect your score – meaning there is not one single thing you can do.

Good news: You are in control of almost all of these factors.

So lets get into the ways that you can raise your score in just a couple of months. (Obviously a big jump is going to take longer than that).

Know your score You need to know where you are at to start, in order to understand where you want to be. You get 1 free credit check per year from each of the three major companies (Equifax, Experian and TransUnion) – use them!

Set up Auto pay I can not stress this point enough – Seriously I don’t think I can. NEVER miss a payment. This is the biggest thing that effects your credit score.

Lower your credit utilization – Never use more than 30% of your credit limit. FICO has reported that people with an outrageously high (800+) credit score, use less than 10% of their limit.

Do not close your accounts – According to FICO – 15% of your score is made up of the age of your credit history. Unfortunately you don’t have too much control over this one, except to not close your oldest accounts.

Apply for credit at the right time – 10% of your score is determined by your credit inquiries. If you apply for a lot of accounts at the same time (loans, credit cards, etc.) this can lower your score.

Pay your balance in full – Not only does this help raise your credit score, it also avoids interest payments and the accumulation of debt.

Many of you may be doing multiple of these things already, but may need to improve on one or more of them.

Others of you may not be doing ANY of these things, and to you I say – Its only up from here! Your credit score is not a permanent state of being – It is constantly changing and you are not stuck with a single number for the rest of your life.

Start with one or two of these things and focus on them for a month or two – After that add in a third or even a fourth.

Follow these steps and in no time you will see your score start to rise! It may take time but there are zero disadvantages to having a high credit score.