How to Raise Your Credit Score

How to Get Good Credit Raising Your Credit Score


Your credit score has a big influence on your purchasing power: the higher your credit score, the easier it will be for you to get approved for big ticket purchases like a house, a car, large appliances, etc. Some employers even check applicants’ credit scores as part of their hiring evaluation process.


Obviously, your credit score is a big deal. Did you know you have a credit score? All legal adults have one, and they are important in many ways. So let’s start by defining the term “credit score.”


What Does “Credit Score” Mean?


A credit score is the number lenders use to help them decide how likely it is that they will be repaid on time if they give a person a loan or credit card. Your personal credit score is built on your credit history. Your FICO 8 score ranges from 300 to 850. You are considered a higher risk to creditors the lower your score is.


Events that Impact Your Credit Score


Your credit score can be affected by a number of outside influences that are not always fair and not always your fault. For example, identity theft or electronic fraud of some sort can lower your credit score. Other factors that can negatively impact your credit score include getting married, enrolling in college, buying a home, getting divorced, applying for a job, losing a job, and starting a business.  


Who is Keeping Score on YOUR Credit Score?


There are three main “scorekeepers”, which are actually called credit bureaus, and they keep track of everyone’s credit score: Equifax, Experian and TransUnion. They keep tabs on your economic transactions so they can provide reports on your credit scoring. They score you using the VantageScore and FICO models, and these models are based on a scoring range of 300-850.


You Have Three Scores That Are Different. Why?


Having three different bureaus keeping score can sometimes confuse people when they discover their scores are not all the same.


The reason why this happens has to do with the number of ways there are to keep score along with other factors like how lenders may only report to one or two bureaus. Sometimes a lender doesn’t report your purchase at all!


Different lenders also use different scoring models, which results in different numbers.


Here’s the Secret Score All Three Bureaus Now Use


To help bring some consistency to the industry, Equifax, Experian and TransUnion put their heads together and created the VantageScore.


Here are the known factors that VantageScore uses to calculate your credit score:

  • Level of Debt
  • Hard inquiries on credit report
  • Your credit limits and how close to those limits you are
  • Types of credit you own (credit cards, auto loans, student loans, mortgages, etc..)
  • Your payment history
  • When you started building your credit


These factors determine your score. Certain things in your past cannot be changed. But there are some things you can control to help raise your credit score.


4 Ways to Raise Your Credit Score   


1. Take advantage of this awesome website


There are several sites available to help you get a grip on your credit score. One of those is called Credit Karma. This site is popular because of all the awesome stuff they provide, like weekly credit score updates and suggestions on ways to boost your score. One cool tool it offers for free is one that enables you to simulate actions to see how they will affect your credit score.


Everything is free on this site, which is why so many people use it. All it takes to get started is a brief questionnaire on the home page.


2. Let your credit report determine your next move


With your credit report in hand, you can begin making some positive moves toward cleaning up your score. For example, you could start by paying off some smaller debts that are weighing down your score. Then make some payments on the larger debts and ask those companies to report the transactions to the 3 credit bureaus so potential lenders will know you are working to pay them off.


And then be sure to go over your credit report line by line to find any discrepancies. If you find any, dispute them with the bureau who gave you the report. They will investigate the matter and if they find you did not make that purchase, they will remove it from your report. This can boost your score tremendously—30 points or is possible. If you use Credit Karma, you can start the dispute from their website.


3. Start rebuilding with new credit


Once you settle things down, your next step should be getting some credit. Look at it as a stepping stone to restoring your credit score. All it takes is building back trust with lenders by getting a regular credit card with a low balance, or if you are unable to get a regular card, see about getting a secured credit card. This type of card is when the lender issues you a credit line equal to your deposit. Some lenders may go ahead and offer you a partially unsecured amount of money for you to use.


4. Demonstrate Your Responsibility


How you use your credit going forward is a huge factor in raising your credit score back to a respectable level. Making timely payments is crucial. A missed payment can completely destroy your credit, so never do that. You are better off borrowing from your in-laws or best friend than to let a payment be late. Restoring what you lose can take years.


Best thing to do is use your card now and then, just not too often. Experts recommend keeping down your utilization to about 20 percent of your credit score. Creditors like this behavior because it shows responsibility on your part.


Once you use your secured card for several months following the guidelines of keeping your utilization down, maintaining a small balance on the card and making payments on time, you should see your credit score rise up dramatically—possibly 100 points or more!


You’ll then be ready close that secure card and return to using an unsecured card.


You can do it.