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Guide to Improving Your Credit Score 

Your credit score is the number financial institutions use to determine if you're a good candidate for a loan or credit card. Explore the key components that make up your credit score and some of the steps you can take to improve it.

Published April 10, 2023

12 min read

Your credit score is the number financial institutions use to determine if you’re a good candidate for a loan or credit card. The higher your score, the less potential risk you pose to a lender and the more likely you are to get approved for a loan or credit card. With a higher credit score, you could also qualify you for lower interest rates.

Several factors go into calculating your credit score, including your payment history and amount of debt. Because your credit score can impact many short- and long-term financial goals, such as buying a home, it’s important to understand the elements that contribute to your score. Let’s look at some ways you can improve your credit score as well as how it’s calculated:

Understanding Credit Score Basics

Credit Score Ranges

Credit scores range from 300 to 850. The higher your score, the less risk you present to lenders. Lenders may use your credit scores to evaluate loan qualification, credit limit, and interest rates.    

Understanding Creditworthiness 

Your credit score is an indicator of your creditworthiness, or how likely you are to repay your debts. Your creditworthiness helps lenders determine whether or not to extend new credit to you.

Checking Your Score

You can check your credit score for free every year with each of the three major credit bureaus: Experian, Equifax, and TransUnion without any impact to your score.

Good to Excellent Credit

Credit scores between 690 and 739 are typically considered good; scores above 740 are very good; and scores of 800+ are excellent. A higher credit score may allow lenders to offer you better rates or terms.

5 Steps to Improve Your Credit Score

If you’re looking to improve your credit score, here are some steps you can take:

1. Check your credit report for errors

Checking your credit report regularly lets you stay on top of your finances and ensure everything is accurate. You are entitled to a free credit report once per year from each of the three major credit bureaus (Experian, Equifax, and TransUnion). If you see anything that looks wrong, such as an account that doesn’t belong to you or an incorrect credit limit, you can dispute it.

2. Reduce the debt you owe

Most people know that paying their bills on time is important for maintaining a good credit score. This shows creditors that you’re a responsible borrower and helps to build your score over time. What many people don’t realize is that even if you’re making payments on time, having revolving debt can affect your credit score.

Revolving debt, or the balance you carry on any revolving lines of credit, like credit cards, can significantly impact your credit utilization ratio, which is the amount of debt you owe compared to your overall credit limit. By reducing the amount you owe on your credit cards, you can significantly lower your credit utilization ratio and improve your credit score.

3. Keep old accounts open

Your length of credit history impacts your credit score. Therefore, it’s important to keep established accounts open. Closing an older account lowers the average age of your credit accounts, which can hurt your score. So even if you’re not using an old card anymore, it’s usually best to keep it open.

4. Rate shop with soft credit checks

A soft credit check, or soft credit pull, is a credit inquiry that isn’t linked to a specific application for credit, like a pre-approval for a credit card or when an employer conducts a background check. Soft inquiries don’t impact your credit score, whereas hard inquiries, which happen when you apply directly for a new line of credit, may lower your score slightly for a short amount of time.

When looking for a new line of credit, compare rates with soft credit checks and pre-approvals rather than full applications. Rate shopping is a great way to get the best deal on a mortgage, credit card, or student loan refinance—it allows you to learn what different lenders are offering without having to go through the full application process. This can save you money on interest, and you won’t have to worry about multiple hard inquiries affecting your credit score.

5. Apply for new credit only as needed

Opening a new line of credit can have a small impact on your credit score. This can be for a few reasons, including a hard inquiry on your account or the average age of your accounts. A minor credit score dip shouldn’t keep you from applying for a mortgage or refinancing your student loans, but it’s something to keep in mind when considering opening a new line of credit.

How your credit score is calculated

FICO scores are the most widely used credit scores. These scores range from 300 to 850, and the higher your score, the less risk you present to lenders. Here’s a breakdown of the primary factors that go into your FICO score, along with tips on how to improve each one:


Payment history (35%):

This is the most important factor in your FICO score. Lenders want to see that you have a history of making on-time payments, so late payments will damage your score. To improve your payment history, continue to pay your bills on time.

Credit utilization (30%):

This refers to the amount of debt you’re carrying compared to your credit limits. Lenders like to see that you’re using a small portion of your available credit, so maxing out your credit cards will damage your score. To improve your credit utilization, use less than 30% of your total credit limit.

Credit history length (15%):

A longer credit history indicates responsible borrowing behavior over time, so having a long credit history will boost your score. If you don’t have a long credit history, there’s not much you can do about this factor except to be patient and continue using credit responsibly.

Credit mix (10%):

This refers to the variety of credit accounts you have, including revolving accounts like credit cards and installment loans like mortgages or auto loans. Lenders generally see a mix of different types of accounts as positive.

New credit (10%):

Whenever you open a new account or get an inquiry from a lender, it can ding your score slightly. A lot of recent activity, such as opening several new accounts, can also signal risk to a lender and impact your credit score. If you’re planning on applying for a loan soon, try not to open any new accounts or get any new inquiries in the months leading up to your application.

Keep track of your credit score

It’s important to keep tabs on your credit score. Fortunately, there are a few easy ways to do that.

You can get your full credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You’re entitled to one free report from each bureau every year. You can pull them all at once or stagger them throughout the year to check on your credit more frequently.

Many banks and credit card issuers offer ongoing credit monitoring. This allows you to see your score and some of the factors affecting it any time you want. These scores are updated monthly, so you’ll immediately know if there’s any activity on your account that could signal identity theft.

Improving your credit score can take time and patience, but it’s worth the effort. Watch this quick video to learn more about your FICO score and why it matters.

How long does it take to rebuild a credit score?

If you’re trying to rebuild your credit, you might wonder how long it will take to see results. The answer depends on several factors, including your starting credit score and which steps you take to improve it. However, there are some general guidelines you can follow. If you don’t have a long credit history or you’re building credit for the first time, it may only take a couple of months. On the other hand, if you’re trying to rebuild after a bankruptcy or foreclosure, it could take much longer—sometimes up to several years. The important thing is to stay patient and keep up with your payments, and eventually, you should see your score begin to rise.

Maintain good credit habits

Keeping your credit in check requires ongoing diligence.

Pay your bills on time.
Pay your bills on time.
This is important for all your bills. Since payment history makes up 35% of your credit score, any late payments could damage your score. Setting up automatic payment whenever possible helps make this easy.
Keep balances lows on credit cards.
Keep balances lows on credit cards.
If you have a high credit card balance (compared to your credit limit), it could look like you’re over-using credit even if you pay the bills in full every month. Consider sending in payments at least twice a month to keep the running balance lower. A good rule of thumb is to keep your balance to 30% or less of your limit.
Don’t open a lot of new accounts in a short period.
Don’t open a lot of new accounts in a short period.
New accounts will lower your average account age, and it can create too many “hard credit pulls,” both of which could bring down your score. And it could offer temptation to accumulate debt by over-spending. Apply for and open new credit accounts only when necessary.


How much do you know about credit scores?

Credit Terms to Know

Credit report
Credit reports list your bill payment history, loans, current debt, and other financial information, plus personal information like where you live and work, any arrests or bankruptcy history.
Credit score
A credit score is a three-digit number that rates your credit risk and helps lenders determine whether to give you credit, and can impact the terms and interest rate they will offer you.
Hard inquiry
Also known hard credit check, or hard pull, is made by lenders to review your credit history and credit score when you apply for a loan or a credit card. A hard inquiry requires your permission but may lower your credit score temporarily.
Soft inquiry
A soft inquiry, or soft credit check, is a request to review your credit report by potential lenders, but unlike a hard inquiry it doesn’t affect your credit score.
Credit freeze
A credit freeze, or security freeze, is a step you can take to prevent credit, loans and services from being opened in your name without your permission. This restricts access to your credit report but won’t affect your credit score.
Credit utilization
Refers to how much of your available credit you use at any given time, or how much debt you’re carrying compared to your credit limits. It’s typically recommended that you use less than 30% of your total credit limit.
Interest rate
The amount charged, expressed as a percentage of principal, by a lender to a borrower, for the use of assets.
Credit history
Is a major part of your credit score and is a record of how you've used credit and managed your debts, with ongoing records of your financial information, including repayment of your debts.
Your creditworthiness is a measure of how well you've handled your credit and debt obligations, and how likely you are to repay your debts.
Credit mix
This refers to the variety of credit accounts you have, including revolving accounts like credit cards and installment loans like mortgages or auto loans.
Debt-to-income ratio
Is a percentage that takes your total recurring monthly debt – including minimum credit card payments, car payments, student loans, mortgage payments, etc. – and divides that number by your by gross monthly income.
FICO score
FICO scores are the most widely used credit score models by lenders to assess your credit risk and determine whether to extend credit.

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