How to improve your credit score

So you’ve checked your credit score and are… ahem…less than thrilled with the results. It happens to the best of us, whether because of past financial hardship or a lack of credit experience. But now you’re ready to take action and raise your score (high five!)

Maybe you’re figuring out how to raise your credit score fast so you can get a loan with a good interest rate, or perhaps you’re thinking ahead and want to set yourself up for success in the future. Whatever the reason, your credit score is an important metric that has an impact on many aspects of your finances. Here’s what it is, how it works, and what you can do to get those numbers where you want them to be.

What is a credit score?

Your credit score is a three-digit number, typically between 300 and 850. Among other factors, it reflects your credit history, and your track record of paying your debts. The score gives lenders an idea of how likely you are to make payments on time. Lenders use this information to make decisions about whether to extend credit, like a mortgage, credit card, or auto loan, and at what rates. For example, borrowers with higher scores are seen as more likely to pay their debts.

Lenders are more likely to offer them credit—and lower interest rates. They may see people with lower scores as risky and may be less likely to offer them credit.

What is a good credit score?

A score of 670 to 739 is typically seen as good based on ranges cited by Equifax and Experian. TransUnion cites a good range of 661 to 780. Anything above that level is very good or exceptional, and lower scores are considered fair or poor.

If your score is on the low end, don’t panic. The fact that you’re seeking to improve your credit is a great sign, and this number isn’t set in stone. Whether you’re looking to improve your credit score to qualify for a large upcoming purchase on credit or to get a better interest rate, there are plenty of opportunities to improve your credit score.

How to raise your credit score

As you learn how to raise your credit score, not only is it important to understand what is a good credit score, it’s also important to know how credit scores are calculated.

Here’s how FICO, the credit score used by most lenders, calculates your credit score:

• Payment history (35%): Your history of paying debts on time
• Amount owed (30%): Your credit utilization rate, or how much of your available credit you’re currently using
• Length of credit history (15%): How long you’ve been managing various debts
• Credit mix (10%): The types of debt you have
• New credit (10%): Are you actively seeking new debt?

Let’s dive into how you can use each of these factors to raise your credit score.

How to improve your credit score: 5 tips

Having a good credit score is essential if you want to access credit with ideal terms and rates. But building credit and maintaining a higher credit score takes time and effort. If you need to know how to improve your credit score, here are some key points to keep in mind.

1. Pay on time, every time. Wondering how to raise your credit score fast? The best way is to make debt payments on time. Payment history is the most important of the five factors that affect your FICO score. No matter what it takes—turning on reminders on your phone, setting up autopay, or tying a string around your finger—make sure you pay your credit card and other debt payments on time every month.
2. Keep balances low. Your credit utilization ratio, calculated by dividing how much you owe by how much available credit you have, should be below 30%. The lower that number is, the better. Using too much of your available credit can indicate to potential lenders that you’re more likely to miss payments.
3. Think before closing older accounts. Potential lenders look at how long you’ve held existing credit accounts to determine whether you’re reliable and consistent in paying what you owe. Consider keeping older accounts open to maintain a longer credit history, even if you rarely use them. 
4. Check your credit mix. Having a good credit mix means using a variety of different types of credit: installment accounts, such as a mortgage, car loan, personal loan, or student loan, as well as revolving accounts, like credit cards and gas station cards. If you’re wondering how to improve your credit score, it’s helpful to diversify to show you have experience successfully managing different types of credit.
5. Seek new credit with caution. Opening a credit card or loan account and making on-time payments is one way to build credit and improve your credit score. (Here’s how to build credit without a credit card.) But a word of caution: Opening or even just applying for too many new credit accounts in a short period can ding your credit score.

If you’re trying to figure out how to raise your credit score fast, bear in mind this will look different from one person to the next. Those with lower scores may need time and patience to make progress. But don’t give up—being consistent with the tips above is crucial.

How Spruce can help you keep tabs on your credit score

Your credit score has a big impact on the financial moves you can make, whether it’s renting an apartment, qualifying for a new credit card, getting a loan, or applying for a job (yep—many employers check your credit!). That’s why it’s crucial to stay informed about your credit score so you know when it might need a boost.

Spruce lets you know what’s up with your credit score, with a credit tab in the app that lets you view your FICO score any time.^{Disclaimer number5. Go to disclaimer for more details.} You can even get monthly updates and additional details on the factors that might be impacting your score, so you know how to raise your credit score without breaking a sweat.

Let Spruce help you get better with money

If you’re trying to improve your credit score, reach your savings goals, or just be more confident with money, the Spruce mobile banking app has you covered with a wealth of tools at your fingertips.

With features like saving goals, fee free overdraft protection up to $20^{Disclaimer number6. Go to disclaimer for more details.}, and the Watchlist budget tracker, you can continuously make strides with Spruce to boost your money skills.

Get started with Spruce! 

This information provided for general educational purposes only. It is not intended as specific financial planning advice as everyone’s financial situation is different.