How can I get my score higher?
Credit scores measure the level of risk a lender takes when they agree to do business with you. When you order your credit score, you will receive a list of the individual risk factors that are most impacting your scores currently. Some examples of these factors might be: late payments, high credit card balances, too few active accounts, or collections.
This list is designed to let you know exactly what elements in your credit history may be negatively impacting you so that you can make the necessary changes to improve your scores.
Credit Score Risk Factors
The risk factors most impacting a credit score will vary from one individual to another, and they may even vary from one month to the next. However, the two most important factors in every credit score are:
- Payment history - The most important factor in credit scoring is always whether you make all your payments on time. Although individual credit and financial situations may vary, missing payments is the biggest indicator of risk for a business trying to decide whether to approve you for credit or other services.
- Utilization Rate - This is the second most important factor in credit scores. Also called utilization ratio, it measures how much of your available credit you are currently using on your revolving accounts. The lower your utilization rate, the better for your credit scores.
Improving Your Credit Score
If you have missed payments in the past or have currently delinquent accounts and want to increase your scores, the first step is to bring all accounts current and ensure that all payments are made on time going forward.
Although late payments remain on the credit report for seven years, the further in the past they occurred, the less they will affect you. In time, your more recent on-time payments will demonstrate that you are managing your credit responsibly, despite past credit troubles.
Next, review your credit card balances. If your risk factors indicate that your current credit card balances are too high, you can help increase your credit scores by paying down those balances.
Experts recommend keeping your utilization rate below 30 percent, but below 10 percent is best for credit scores. Ideally, you should pay your credit card balances in full each month. Doing so ensures that you won't be spending money on interest or accumulating credit card debt.
Finally, review the list of unique risk factors provided to you with your credit score to see what specific changes you can make to build a stronger credit history and improve your credit scores even more going forward. For example, if you have an unpaid medical collection appearing in your credit history, paying off that past due debt can help improve your scores.
Add Your Utility and Cell Phone Payments to Your Credit History
Experian now offers a free tool called Experian Boost®ø that allows you to increase your credit scores instantly by including your on-time utility and cell phone payments in your credit report. When you sign up, you give Experian permission to access the checking account, savings account or other demand deposit account through which you pay your bill each month.
Once you verify the information to be added is correct, Experian adds the payments from the service providers you specify — going back up to 24 months -- to your credit history. The service is free and includes a FICO8 score at the start of the process and provides you with an updated FICO8 score when you complete the process, so you can see how much your score was boosted.
Experian Boost is especially helpful for consumers who may have a thin credit file with five or fewer credit accounts and consumers with credit scores less than 680.
You can learn more about increasing your credit scores with Experian Boost on our blog.
Thanks for asking,
Jennifer White, Consumer Education Specialist
This question came from a recent Periscope session we hosted.