Ultimate Guide to Increasing Your Credit Score

 March 16, 2017
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how to increase credit score

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A good credit score can unlock a tremendous amount of financial opportunity.

For instance, you can not only gain access to more credit but also cheaper credit. You’ll have an easier time being approved for leases. You’ll receive better rates on your insurance premiums. The list goes on.

Unfortunately, many people deal with the struggle of how to increase credit score ranges. If you’re one of them, you’ve come to the right place. Prepare to dive into everything you need to know about how to increase your credit score.

How credit scores are calculated

The two most popular credit scoring models are FICO and VantageScore. While their models differ and they have several versions of each, the breakdown doesn’t vary much.

When you think about your score, know that you’re never going to be able to increase your credit score to be the same for all models.

On top of that, lenders will use their own models of these scores based on the product they’re selling. That’s why we have multiple credit scores.

Don’t worry about how to increase credit score factors so much that you get a “perfect” score. You simply need to know how to raise your credit score into a good range.

The most influential credit score factors

Here are the factors that will play for or against you on this, as described by MyFico:

  • Payment history.
  • Amounts owed.
  • Length of credit history.
  • Credit mix.
  • New credit.
ways to improve credit score

Credit Score Factors, myfico.com

While there is a lot you can do to improve credit score ranges, you can primarily focus on two factors: payment history and amounts owed.


1. Payment history

Payment history is currently worth 35 percent of your score. Remember, any payment later than 30 days or more could count against you. On the flip side, if you’ve never make a late payment, you don’t have to worry about this.

2. Amounts owed

Amounts owed comes in second at 30 percent of your score. This is also known as credit utilization or credit utilization ratio. Put simply, this is the ratio of how much you owe on revolving credit (i.e. credit cards) compared to the credit limits you have.

The ideal credit utilization ratio is 30 percent or less. You can find your percentage by adding all of your limits and balances except for installment loans. If the balances equal more than 30 percent of your limits, then you need to pay them down.

Together, payment history and amounts owed make up more than half of your score. If you were to focus mainly on these two factors, then you’d already be on your way.

3. Length of credit history, credit mix, and credit history

As for the other players, length of credit history comes in at a respectable 15 percent. This is good news because all you have to do to achieve this is keep your accounts open. Credit mix and new credit close the loop at 10 percent each.

Many people focus so much on every aspect of their score they fear any financial misstep could irrevocably damage it. Don’t do that to yourself. Working to accomplish perfection in every area could burn you out, which will be far worse in the end.

How to increase credit score in 10 easy moves

Now for the fun part. Let’s talk about ways to improve credit score ranges. Remember, you don’t need a perfect credit score, you just want to be in the highest possible range.

1. Avoid late payments

Payment history makes up 35 percent of your credit score. If you never make a late payment, then that’s 35 percent of your score in good standing. It’s almost too easy to get this one right.

Too easy, that is unless you have trouble remembering or you can’t afford your payments. If you can’t remember to make your payments, sign up for automatic payments. If you can’t afford your payments, there are a few things you can do.

Call your creditor and ask them to move the due date. Having the date hit at a different time in the month might give you some breathing room.

However, if you’re walking a tightrope on your budget every month and seriously worry about being able to make your payments, that’s another conversation.

If your credit is good enough, consider consolidating your debt to lower your payments and/or interest rates. You could also ask your lender and to lower your rate – something that will effectively lower your payments, too.

And if you’re still having trouble, talk to your lender to see if you can refinance or work out a new payment plan. You can also see if you qualify for a hardship program. Not all lenders offer these options, but you lose nothing by asking.

Not all lenders offer these options, but you lose nothing by asking.

2. Pay down revolving debt first

Remember “amounts owed” or credit utilization? This factor focuses on revolving debt, such as credit cards. If you want to do well here, keep those credit card balances as low as possible (zero if you can).

Since you’ll need to keep your credit utilization ratio at 30 percent or below to do well in this area, focus on paying down revolving debt before installment loans. In the end, revolving debt almost always has a much higher interest rate. Eliminating it first is good for your credit score and your wallet.

3. Increase your revolving credit limits

If debt paydown is going to take awhile, use this trick to boost your credit score in the meantime: increase your credit limits.

To do this, call your credit card issuer and ask them if you can apply for a higher credit limit. If you get approved, then your credit utilization ratio will automatically improve – as long as you don’t use your increased limit.

Increase your credit limits and start working to decrease your balances. As a result, your credit utilization ratio will improve.

4. Get a credit card

There’s a lot of fear around credit cards, and for good reason. Credit card debt can be costly and take years to get out of – especially if you only make the minimum payments.

If you want to see just how long it can take to pay off credit card debt with only minimum payments, this chart posted in Business Insider breaks it all down:

how to increase credit score

That said, avoiding credit cards (or debt in general) is going to hurt your efforts to improve your credit score. Credit scores exist so lenders can estimate your likelihood of repaying money lent to you.

But if there’s no credit history to see, then they can’t make that estimation. That means they’re not as likely to lend money to you.

Go ahead and get a credit card if you don’t have one. Just don’t carry a balance on it month to month. Use it and pay it off every month, and you’ll be able to build credit without going into debt.

And if you can’t get approved for a traditional credit card, try a secured credit card. This is a credit card you put a down payment on, which makes it easier to be approved for. It’s also a great tool for establishing credit.

5. Use student loans to your advantage

Just like a credit card can help you build credit, loans can, too.

Remember that credit mix factor? It’s only 10 percent of your score, but this is where having student loans helps. If you have a credit card and a student loan, then you’re showing that you have a credit mix and can handle multiple types of credit.

Paying off your student loans – and auto loans and mortgages – also gives you an opportunity to build up a positive payment history and length of history with your servicers. Stay current on your payments and your credit score will benefit from it.

If you have trouble making your student loan payments, don’t let late payments happen before you take action. Anyone seriously struggling with federal student loans can apply for income-driven repayment plans to decrease their monthly payments.

You can also refinance your private student loans or ask your lender if they have a way to work with you when you’re struggling to make ends meet.

6. Pay rent via credit card

Speaking of payment history, the more you can have positive payment history reported on your score, the better. Therefore, if you’re a renter, use that money leaving your pocket every month to help your score. Ask your landlord if you can pay via credit card.

Just remember to pay the balance in full every month before the end of the billing period. Do not let your rent cost you money in credit card interest. Your best bet would be to pay your rent on the credit card and then immediately make a payment on your credit card for that amount.

Bonus: if your landlord lets you pay via credit card, you can use that to build credit and earn rewards if you have a cash back or travel rewards card.

If your landlord won’t accept credit cards, ask if they are signed up with RentalKharma. This credit-building tool takes into account all of your rent payments so you can improve your credit score with on-time payments.

Sign Up With RentalKharma Today

7. Review your credit report and dispute errors

Every year you’re entitled to one free credit report from each of the three credit reporting bureaus. You can get these reports at AnnualCreditReport.com.

Don’t forfeit your opportunity to check your credit report. Errors on reports, after all, are common. According to The Washington Post, since 2012, “There have been more than 158,000 complaints against the three agencies, 80 percent of which were about incorrect information on credit reports.”

Credit reporting errors can be quite costly to your credit score. Review your credit reports every year and immediately dispute anything that’s not right.

8. Rate shop wisely

There are times when you’re going to need a new loan and will want to get it at the lowest interest rate possible. But a lot of people worry about what rate shopping will do to their credit score.

If you rate shop wisely, you can ensure that it doesn’t damage your credit score. The best way to do this is to keep your loan applications to the same type of loan with the same amount during a 14-day time frame.

That way the credit reporting bureaus will fully understand that you are loan shopping and batch the inquiries so they don’t damage your score.

9. Pay off credit cards

You can pay off credit card debt more efficiently and build more credit if you consolidate it onto a balance transfer credit card or an unsecured loan. Then keep the card open to establish a longer credit history with it.

A balance transfer credit card typically comes with a zero percent interest rate for a period of six to 24 months, depending on your credit. That gives you a certain amount of time to pay on your balance interest-free.

An unsecured loan can also be a good option if you get an interest rate that’s much lower than the rate on your current card. It also helps because it has a fixed payoff date.

With either of these options, the card or loan will pay off your existing credit card or cards. If you keep the old ones open, your credit utilization and length of credit history will benefit.

10. Take care of any debt in collections

Finally, if you have debt that’s gone off to collections, don’t think that means you don’t have to pay it. Accounts in collections are highly damaging to your credit score. According to a white paper by VantageScore, accounts in collections can stay on your credit report for seven years.

Take care of these accounts sooner rather than later. Call the collectors and either get on a payment plan or offer to settle the debt.

Then, when it’s paid off, ask them to send a letter saying to the credit reporting bureaus. Be diligent about this so you can get these marks off your report ASAP.

Focus on what’s good for your money

In the end, if you simply follow best practices for what’s good for your finances, then your credit score should improve as a result.

Use credit, but pay it off before the interest builds. Pay all of your bills on time. And keep your long-standing relationships with certain banks and lenders strong by leaving accounts open. You’ll soon see an uptick in your score

The rest of these tips are great if you need a quick credit score boost, but they shouldn’t feel like too much. Do what’s good for you and you’ll do what’s good for your score.

Interested in a personal loan?

Here are the top personal loan lenders of 2021!
LenderAPR RangeLoan Amount 
5.99% – 18.85%1$5,000 - $100,000

Visit SoFi

4.37% – 35.99%$1,000 - $50,000

Visit Upstart

5.94% – 35.97%*$1,000 - $50,000

Visit Upgrade

99.00% – 199.00%2$500 - $4,000

Visit OppLoans

5.99% – 24.99%3$5,000 - $40,000

Visit Payoff

7.99% – 29.99%4$7,500 - $40,000

Visit FreedomPlus

7.99% – 20.88%5$5,000 - $50,000

Visit Citizens

9.99% – 35.99%6$2,000 - $36,500

Visit LendingPoint

10.68% – 35.89%7$1,000 - $40,000

Visit LendingClub

9.95% – 35.99%8$2,000 - $35,000

Visit Avant

1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.85% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5. Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

6 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $36,500, at rates ranging from a low of 9.99% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

7 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.

8 Important Disclosures for Avant.

Avant Disclosures

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Based on the responses from 7,302 customers in a survey of 140,258 newly funded customers, conducted from August 1, 2018 – August 1, 2019, 95.11% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.