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How to Improve Your Credit Score

by: Emma Higgins

Update: 09/2021

Numbers have begun to define our lives. There are several numbers that your life simply wouldn’t be the same without: phone numbers, social security numbers, drivers license numbers, and more. However, one number which has a huge impact on your life is something many people do their very best not to think about – their credit score.

However, this trend is starting to change. As more people become aware of how important their credit score is to the quality of life they lead, they are increasingly looking for ways to improve their credit score.  Credit scores aren’t something you’re taught in schools. There is a great deal of confusion regarding what a credit score actually is and how your actions can alter it. Understanding what goes into a credit score and how you can improve your credit score are essential steps to getting the most out of your finances in the modern age.

What is a Credit Score?

A credit score is a numerical representation of the risk that you’ll be more than 90 days late on a bill. The higher the number, the lower the risk of default the consumer is understood to have. To put it more simply, a credit score is an attempt to guess if you’ll pay your bills on time. Traditionally, credit scores are used to determine eligibility for loans and lines of credit and the terms individual consumers are offered on loans and lines of credit.

However, credit scores are being used for more purposes than ever before. Landlords have started to consider credit scores to determine who to lease property to and employers are looking at credit scores to determine how well potential applicants handle money.

As a result, credit scores grow in importance every day. They directly and indirectly influence nearly every aspect of your life, from what kind of car you can afford to what kind of job you can get. Therefore, it’s no surprise that so many people are interested in learning more about credit scores and how to improve them.

How is a Credit Score Calculated?

A credit score is calculated from five different types of information. While each credit reporting agency uses a different method to reach their precise score, the broad categories and how much each category is weighed into a score is well known.

Payment History

The first, and largest aspect of your credit score is your payment history. This component makes up 35% of your score. Payment history includes installment and revolving debt, so things like loans as well as things like credit cards.

In addition to looking at whether or not you’ve missed payments, a credit score also considers how often you’ve missed payments, how recently you’ve missed a payment, and how severe your missed payment record is.

Missed payments stay on a credit report for seven years after they’ve been made. Therefore, one of the most important things you can do to improve your credit score is simply pay your bills on time. The result will be a good payment history and a better score.


How to Improve Your Credit Score

Credit Utilization

The next factor that credit reporting agencies consider is credit utilization, or how much credit you have access to versus how much you’re using. This aspect makes up 30% of the final credit score. Credit utilization is measured both by individual cards as well as across all of your cards.

Credit reporting agencies view maxing out your credit cards as a sign you do not handle debt responsibly, so carrying a balance on your credit cards will lower your credit score. There’s no set figure on how much balance you can carry before your credit score starts to really suffer, but any balance other than $0 has the potential to bring your score down.


New Credit

The amount of new credit you’ve taken on recently counts for 10% of your score. Lenders have found that people who seek lots of new credit all at once are more likely to fall behind on their bills. Therefore, only getting a new credit card or loan when you need it is the best way to help keep your score up.

Credit Mix

Credit mix is the final aspect that goes into your credit score. This component looks at what kind of credit accounts you use. Lenders like to see that you are able to responsibly handle multiple types of credit accounts, as this is a solid indicator that you are responsible with debt and likely to pay your bills on time.

Moreover, a mix of credit shows that you use credit in a way designed to help boost your future finances, rather than merely spending money you don’t have. For example, successful mortgage payments show that you’re building equity and value in a home, compared to credit card payments which show you’re paying for the goods and services you use every day. Those goods and services aren’t likely to grow in value or produce a return, whereas equity in a house does create value.

Why is a Credit Score Important?

We’ve already briefly mentioned how your credit score can impact your life, but the size of that impact is so great that the importance of a good credit score merits more attention.


The most common way that a credit score is used is to determine whether or not someone is eligible for a financial product like a loan or line of credit. Lenders and creditors don’t give money away and hope to get paid back, they take calculated risks designed to maximize their returns. Therefore, if your credit score is too low, then lenders will think you’re too much of a risk to offer a loan or line of credit.


In addition to determining your eligibility for a loan or line of credit, your credit score also influences what kinds of terms you’ll be offered on financial products. Once again, it’s important to keep in mind that creditors and lenders are in the business of making money. The lower your credit score is, the more likely it is that these companies will be afraid you won’t be able to make your payments, which costs them money. Creditors and lenders make up for this risk by looking to get a better reward, or profit, from it.

For example, if creditors think there is a higher chance you default on your loan, then they aren’t going to offer you an extremely cheap interest rate. Instead, you’ll pay more money on interest because the company needs to turn a greater profit to justify the risk.

Employment, Housing, and More

The final way that credit scores are being used is to give individuals and entities an idea of how responsible you are with money. Landlords have been using credit scores more often to determine which of several applicants will be offered a contract to lease their property. People with a higher credit score are more likely to pay on time. Therefore, if a landlord has to choose between two people when determining who to rent to, and each will pay the same amount, then it makes sense that they’d go with the person who’s most likely to pay.

Employers are also using credit scores. More companies than ever before ask applicants to give permission for a credit check. Employers use this information to see how different applicants handle money, debt, and budgeting. Therefore, your credit score could be the difference between a new job and being stuck in a rut.

There are other ways people use credit scores as well. There’s even a group of people who search the credit history of people they plant to meet with from online dating services. Therefore, you can see why so many people want to make sure their score is as high as possible.

Ways to Repair Your Credit Score

Everyone makes mistakes sometime. It doesn’t matter if your mistakes are completely your fault, or were just bad luck that could have happened to anyone. When you make a financial mistake and miss a payment, or do something else that impacts your credit score, you have a few options.

It’s important to note that all of these strategies for credit repair can be done by individuals on their own. There’s no special license or expertise needed to take steps to repair your credit. That being said, many people prefer to use the best credit repair companies to save time and energy and to take advantage of the company’s familiarity and experience with the credit repair process. You should choose the best credit repair option for your specific situation.

Make On-Time Payments

The first way you can boost your credit score is by making on-time payments to your accounts. Remember that payment history makes up 35% of your score, so every time you make an on-time payment you’re doing your credit score a great service.

However, late or missed payments can stay on your credit report for seven years. This is far too long for many people, who need an improved credit score to get a loan on a house or car, or that are applying for jobs and housing. If you need fast credit repair, then there are several other options you can use.


The first thing you can do to improve your credit score is request that the credit reporting agency verify some piece of information on your report. US law states that if an item is not 100% known to be accurate, then it must be removed from a credit report. As a result, you can take advantage of things like lost paperwork, sold loans and debts, and other administrative events to get negative information removed from your report.

Verification is also an essential step to repairing credit that has been destroyed by identity theft. Identity theft can create tens or even hundreds of thousands of dollars in debts. Therefore, the verification request is key credit repair tool to ensure you don’t pay for someone else’s recklessness with your finances.


The next strategy you can use to remove harmful and inaccurate information from your credit report is a dispute. A dispute is similar to a verification request in that you’re challenging the accuracy of the information on the report. However, with a dispute you’re asserting that the information is false, as opposed to a verification request which merely checks the accuracy of the information. As a result, disputes go through a slightly different process than verification requests. The best credit repair companies

Letter of Goodwill

Repairing credit doesn’t only focus on challenging information. If you’ve had problems in the past, but have since made them right, you can ask for a letter of goodwill from your creditor. A credit repair company will have a strategy to get the most out of these letters, which essentially request that your creditor withdraw the negative information they’ve entered on your credit report.

Secured Credit Card

Finally, you can use a secured credit card. If your score is too low to get approval for credit or loan products, then you’re in a tight spot. You can’t improve your credit history without using credit. Therefore, a secured credit card is something of a credit card to repair credit.

You pay a deposit, or security, equal to the limit on the card. You then use the card like normal and pay your bill every month on time. Companies are more likely to offer secured credit cards to customers with low credit scores because these products entail minimal risk for the card issuer. Therefore, many people use secured credit cards to improve their score with a record of responsible credit use and on-time payments.


As you can see, there are several options for repairing credit. You can find free credit repair services, or just use DIY credit repair or self credit repair. No matter what option you pick, your credit score is important, and you deserve the best score possible so you can live the life you want to lead.