Raising Your Credit Score

Image of someone paying bills

It's important to realize that if a credit score is low, it won't necessarily stay like that forever. A score is a "snapshot" of an individual's credit history at any point in time. It changes as new information is added to their credit history, and it can improve if they manage their credit responsibly.

We know that credit scores are made up of five parts. Let's see what you can do within each of these parts to improve your overall score.

Payment History

  • Pay your bills on time. Delinquent payments and collections can have a significant negative impact on your score.
  • If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
  • Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven to ten years.

Amounts Owed

  • Keep balances low on credit cards. High outstanding debt can affect a score.
  • Pay off debt rather than move it around. The best way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
  • Don't close unused credit cards as a short-term strategy to raise your score.
  • Don't open a number of new credit cards that you don't need. This approach could backfire and actually lower your score.

Length of Credit History

If you have only been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a greater effect on your score than if you don't have a lot of other credit information.

Image of opening a new credit account

New Credit

Re-establish your credit history if you have had problems in the past. Opening new accounts responsibly and paying them off on time will raise your score in the long term.

Types of Credit Used

Apply for and open new credit accounts only as needed.

It's okay to have credit cards, but you must manage them responsibly! In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be a higher risk than someone who has managed credit cards responsibly.