I’ll be honest here – I’m no expert in this field. However, I am going to write from my experience and what I have learned. I have been able to increase my score in the past by completing extensive research to figure out the steps I needed to take.
Is your credit score not quite where you imagined it should be? Maybe there’s a specific reason why your credit is on the lower end.
Perhaps you are not even sure if your credit score is low or how to get it back to a range you feel is more acceptable.
Credit Scores Are Used For More Than You Think
Why does it matter what my credit score is if I’m not purchasing a house or a car anytime soon?
Here’s a list of potential companies that can see your credit score:
- Employers – Yes, your next job could depend on how well you manage your finances. Usually if an employer does ask to pull a credit report, it is a modified report that they are seeing. The employer cannot gather this report information without first having your approval to do so.
- Internet/Cell Phone Provider Companies
- Utility Companies
- Car Insurance Companies – Yes, if you have a high insurance premium or have been denied insurance before, the cause could have been because of your credit.
- Landlords
- Banks
- Mortgage Lenders
- Credit Card Companies (potential and current)
- Loan Companies
Do you currently know your credit score? If you don’t, I suggest using Credit Karma to see your most current report from TransUnion and Equifax. It’s free to see your reports and score.
What is a Good Credit Score?
- Less than 580 – Poor
- 580 – 669 – Fair
- 670 – 739 – Good
- 740 – 799 – Very Good
- 800+ – Excellent
How is My Credit Score Calculated?
Here’s a list of things that impact your score
- Payment History – 35%
- Available Credit / Amounts You Owe Creditors – 30%
- Length of Credit History – 15%
- Credit Mix – 10%
- New accounts & Inquiries – 10%
(Ranges & Percentages Pulled from Equifax)
So How Do I Improve My Credit Score?
Let’s go down the list above and touch on each of these.
Payment History
This one factor impacts your score the most.
You want 99% – 100% on time payments. If you had a rough patch and you’re well below that, time will heal it as long as you’re making all on time payments now.
There are companies that say they can repair this for you. Actually, you can repair it yourself.
I pulled my report from Credit Karma a few years ago and disputed every single late payment that was on there.
There were some from a few years prior and I was like “there’s no way I paid that 30+ days late.”
A few of them came off and my score was bumped. It’s worth a shot.
Length of Credit History
Obviously if you’re in your twenties, it’s unlikely your credit history isn’t going to go back 10+ years.
Or is it?
In my article “Things You Can Do Financially For Your Child“, I detailed some things you could do to financially “one up” your children. One of these things was to make them an authorized user on your credit card.
With that in mind, do you have a partner or parent who has a longer history? Could you become an authorized user on one of their amazing accounts? This could turn around and bite you if the person finds financial hardship, so be careful with your choosing.
Available Credit
I believe this is the quickest way to up your score in a short period of time. Pay off all your debt.
Get your credit card usage down to 10% or less. This has a huge impact on your score.
You could apply for new credit, but this would cause a new account to appear and that could temporarily ding your score. Additionally, if you’re having trouble paying your credit cards now, the last thing you want to do is add more temptation. Focus on paying your current cards off quickly. Check out our article on paying off high interest credit cards to get started.
Inquiries
Hard Inquiries only stay on your credit report for two years so most likely, they are dropping off soon. The negative impact on your score also goes down across that period of two years.
Before you make a large purchase, like a house, don’t go out applying for a bunch of credit cards or go shopping for a car loan.
New Accounts
Nothing you can do here except not open new accounts prior to making a large purchase.
Monitor
I’ve already mentioned Credit Karma as a way to look at your credit score and open disputes as needed.
There are numerous free ways now to keep an eye on your credit score without paying.
You are allowed one free pull of your credit score from all three reporting agencies from Annual Credit Report.com – Take advantage. Make sure you’re checking all three reports – Equifax, TransUnion, and Experian. I’ve never seen all three of my reports look the same.
My two major credit cards that I use daily also offer credit score monitoring. My Capital One card allows me to pull my new score once a week and lets me know if there’s anything sketchy going on. It has a useful Credit Simulator that will show me what my score would be if I made certain decisions, like opening an account or paying off balances.
In Conclusion…
Sadly, there’s not an overnight fix to repair your credit. However, there are ways to dispute items you find that you don’t agree with.
Make sure you factor in time to pay off debt before making a large purchase, like a home.
Monitor your score from all three credit bureaus.
On time payments are SO important. If you failed to make previous on time payments, you can’t change the past. However, you can make all the current and future payments on time, which will help improve your score.
Time heals past mistakes.
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