For some people, moving up a credit tier could be just what they need to get approved for new credit. If your credit score falls in the "fair" range, moving to the "good" range could be just a few steps away—and might help you save thousands of dollars over the course of your life.
What Is a Fair Credit Score?
Credit scores are numbers lenders use to judge how likely it is that a possible borrower will pay back their debt. Depending on the scoring model, scores typically range from 300 to 850 and are further broken into different ranges, with scores between 580 and 669 typically considered fair.
FICO® Scores, the credit scores used by the majority of lenders, consider scores below 580 very poor and scores above 669 good, very good or exceptional, depending on where they fall. Credit scores in the good to exceptional range typically qualify borrowers for a wider array of credit products and potentially better interest rates, while those in the very poor to fair range may limit credit availability and result in higher interest rates.
Increasing your credit score from fair to good might not seem like a big deal, but the benefits of having a good score can be well worth the effort. Imagine your credit score was 660, putting it in the fair range. Improving your score by just 10 points would move you to the good range, opening you up to new borrowing options and better terms.
What Can I Do to Boost My Credit Score to Good?
Seeing an increase in your credit score used to take time and effort, but now you can instantly boost your credit score by using a new tool called Experian Boost. Experian Boost works by giving you credit for past on-time utility and telecom payments. Experian Boost is free to use and can help you boost your score in just a few minutes.
While Experian Boost can help you instantly see an increase in your FICO Score, it's important to establish good credit habits so your score can improve even more over time.
Here are a few more steps you can take to help increase your credit score now and over time.
- Pay down your existing debt. Paying down existing debt can help your credit score in the short term because it lowers your overall credit utilization ratio, which is calculated by dividing the amount of revolving credit you are currently using by the total of your available revolving credit limits. A low credit utilization ratio shows lenders you're using less of your available credit. Credit utilization accounts for 30% of your FICO Score, and lowering it may quickly help to increase your credit scores.
- Make all your payments on time. Payment history is the most important aspect of your FICO Score: Even one missed or late payment can have a negative impact on your score. Make sure to pay any outstanding bills and continue to pay them on time to avoid seriously hurting your credit score.
- Check credit reports for inaccuracies. Mistakes happen, and having inaccuracies on your credit report could cause your score to drop. Make sure to regularly check your credit reports for inaccurate information. If you find anything in your file that shouldn't be there, contact the appropriate credit bureau or lender to file a dispute as soon as possible.
Improving your credit from fair to good can open you up to new financial opportunities, including different types of loan products and better interest rates and fees. Lenders often offer lower interest rates to people with higher credit scores, and that savings in interest can be significant over the life of a loan.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.