A tainted credit score in this day and age, makes it so much more of a hassle to get approved for loans on a new home, car, school, or even to start your own business. Let’s face it, improving your credit score is like losing weight. There is no easy-quick way out, it takes time and knowledge. We may have written a post like this before, but I wanted to get more in-depth with what it takes to revive even the lowest of credit scores.
To keep you as optimistic as possible, the lower a person’s score, the more likely you are to achieve a higher point increase of even 99+. This is because it’s harder to improve scores that already have a solid credit history.
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Credit Score 101
A credit score is a number that shows your credit-worthiness for companies and banks. Normally, if you have a good history of punctually paying your bills in full, this results in a good score. However, if you’ve missed payments, or experienced bankruptcy your score will be lowered. Many people use FICO to access their credit score. Keep in mind that there are 3 credit bureaus that take your credit score.
These credit bureaus are: Experian, Equifax, and Transunion. FICO will provide your credit score depending on how these bureaus score models. Typically, a payment history is 35% of your credit score. Then, 30% is on the debt you have, 15% credit history, 10% credit mix, and 10% for new credit. This is how your credit score is created. However, keep in mind that new credit is looked down on by credit bureaus since it looks suspicious on your account.
Ranges of Your Credit Score
The average credit score has increased over the years in the United States. The number of sheer credit scores can make it difficult to have a cut-off for good credit. Some scores stop at 750, 850, or 990. Normally, a lender will look at your credit-worthiness from different scores to see the chances of you paying them back in time.
For scores that stop at 850, having at least 700 as your credit score is good. However, if you don’t know if your score is good enough to earn lower mortgage rates, contact a mortgage broker. Here is a chart listed below to see an example of the different ranges of a FICO credit score.
| Score Range | Category |
| 300-579 | Very poor |
| 580-669 | Fair |
| 670-739 | Good |
| 740-799 | Very good |
| 800-850 | Exceptional |
| Source | Experian |
How to Improve Your Credit Score
It’s always a good idea to have the best credit score possible. However, if you do not have a good score, here are some ways to improve it.
- Pay your bill on time and in full. By doing this, your credit history will be better than not paying your bills. It ensures that you’re able to be responsible and credit bureaus look for that.
- Have low balances. It’s a good idea to use your credit cards to show you can pay it off. However, be sure that your balance is pretty low. Typically, your balance will be better if it’s low every month so it’s less than 30% of your credit altogether.
- Do not sign up for too many cards at once. Having too many cards will be hard to manage and it can decrease your score. If you need more than one card, only open new cards that you need.
- Don’t close your cards. It is alright if you don’t use a card anymore, just don’t close the account. You can keep the card stashed somewhere while you do not use it.
- Handle inaccuracies. At times, there can be mistakes made on your report that can reduce your score. It is up to you to deal with these mistakes to ensure your score is not effected.
Conclusion
First and foremost, checking your credit score should be number one on the list. Improving your credit score can be as simple as calling out any notable errors in your report. Moreover, if there was no errors, then we can get into the real business of things. Get your payment history on track with automated transfers, pay down your debt (DO NOT move around your debt), and be mindful about your credit utilization. It’s best to keep your balances 30% or less of your credit limits.
If you like the idea of receiving money back for using a credit card, the American Express Blue Cash Preferred gives you 6% cash back when used at supermarkets, 3% at gas stations and department stores, and 1% on all other purchases. Be sure to check out our review on what we think is the Best Secured Credit Cards in the market. For many more bonus offers and benefits, be sure to review our complete list of Credit Card Promotions
