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Paying down debt is saving!

Tips to Increase Your Credit Score

It’s safe to say that most of us understand the importance of credit in today’s world. Not only does it affect your buying power, but it can also affect your ability to rent or own a home, get a job, and even what you’ll pay for insurance coverage. Trying to maintain a healthy credit score can cause some individuals anxiety, stress, and even depression. It’s important to gain a clear view of where we are financially so that we can set a goal and make a practical plan of where we want to be in the future.    

Fortunately, no matter where you’re starting, there are a few things you can do to increase your credit score. Below, are some basic steps that you can take to get started on a path to a healthier credit score (and less worry): 

1. Make All Payments in Full and On Time.

Payment history is the largest factor that determines your credit score. It accounts for 35%. Therefore, making payments on time is the most effective way to increase your credit score and build a good credit file. 

2. Use a Credit Builder Loan or Secured Credit Card  

Adding on to the first step above, payment history makes up 35% of your score, therefore, good payment history is what builds healthy credit files. If you lack a “positive pay history” on your credit report, it’s time to start creating some by opening a credit builder loan and/or a secured credit card. 

3. Maintain Low Overall Credit Utilization. 

Which means that you need to keep a low balance at all times. The credit equation wants you to maintain low credit balances – especially the FICO 8 scoring model. The balances you carry on credit lines account for 30% of your credit score and are the 2nd largest contributing factor.  

4. Address Debt Collections, Charge Off Accounts, and Errors  

An account in collections, a charged-off status, or reporting incorrectly can do some real damage to your credit score, so it’s best to address them as soon as you can.