Ultimate Guide to Increasing Your Credit Score

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how to increase credit score

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A good credit score can unlock a tremendous amount of financial opportunity.

For instance, you can not only gain access to more credit but also cheaper credit. You’ll have an easier time being approved for leases. You’ll receive better rates on your insurance premiums. The list goes on.

Unfortunately, many people deal with the struggle of how to increase credit score ranges. If you’re one of them, you’ve come to the right place. Prepare to dive into everything you need to know about how to increase your credit score.

How credit scores are calculated

The two most popular credit scoring models are FICO and VantageScore. While their models differ and they have several versions of each, the breakdown doesn’t vary much.

When you think about your score, know that you’re never going to be able to increase your credit score to be the same for all models.

On top of that, lenders will use their own models of these scores based on the product they’re selling. That’s why we have multiple credit scores.

Don’t worry about how to increase credit score factors so much that you get a “perfect” score. You simply need to know how to raise your credit score into a good range.

The most influential credit score factors

Here are the factors that will play for or against you on this, as described by MyFico:

  • Payment history.
  • Amounts owed.
  • Length of credit history.
  • Credit mix.
  • New credit.
ways to improve credit score

Credit Score Factors, myfico.com

While there is a lot you can do to improve credit score ranges, you can primarily focus on two factors: payment history and amounts owed.


1. Payment history

Payment history is currently worth 35 percent of your score. Remember, any payment later than 30 days or more could count against you. On the flip side, if you’ve never make a late payment, you don’t have to worry about this.

2. Amounts owed

Amounts owed comes in second at 30 percent of your score. This is also known as credit utilization or credit utilization ratio. Put simply, this is the ratio of how much you owe on revolving credit (i.e. credit cards) compared to the credit limits you have.

The ideal credit utilization ratio is 30 percent or less. You can find your percentage by adding all of your limits and balances except for installment loans. If the balances equal more than 30 percent of your limits, then you need to pay them down.

Together, payment history and amounts owed make up more than half of your score. If you were to focus mainly on these two factors, then you’d already be on your way.

3. Length of credit history, credit mix, and credit history

As for the other players, length of credit history comes in at a respectable 15 percent. This is good news because all you have to do to achieve this is keep your accounts open. Credit mix and new credit close the loop at 10 percent each.

Many people focus so much on every aspect of their score they fear any financial misstep could irrevocably damage it. Don’t do that to yourself. Working to accomplish perfection in every area could burn you out, which will be far worse in the end.

How to increase credit score in 10 easy moves

Now for the fun part. Let’s talk about ways to improve credit score ranges. Remember, you don’t need a perfect credit score, you just want to be in the highest possible range.

1. Avoid late payments

Payment history makes up 35 percent of your credit score. If you never make a late payment, then that’s 35 percent of your score in good standing. It’s almost too easy to get this one right.

Too easy, that is unless you have trouble remembering or you can’t afford your payments. If you can’t remember to make your payments, sign up for automatic payments. If you can’t afford your payments, there are a few things you can do.

Call your creditor and ask them to move the due date. Having the date hit at a different time in the month might give you some breathing room.

However, if you’re walking a tightrope on your budget every month and seriously worry about being able to make your payments, that’s another conversation.

If your credit is good enough, consider consolidating your debt to lower your payments and/or interest rates. You could also ask your lender and to lower your rate – something that will effectively lower your payments, too.

And if you’re still having trouble, talk to your lender to see if you can refinance or work out a new payment plan. You can also see if you qualify for a hardship program. Not all lenders offer these options, but you lose nothing by asking.

Not all lenders offer these options, but you lose nothing by asking.

2. Pay down revolving debt first

Remember “amounts owed” or credit utilization? This factor focuses on revolving debt, such as credit cards. If you want to do well here, keep those credit card balances as low as possible (zero if you can).

Since you’ll need to keep your credit utilization ratio at 30 percent or below to do well in this area, focus on paying down revolving debt before installment loans. In the end, revolving debt almost always has a much higher interest rate. Eliminating it first is good for your credit score and your wallet.

3. Increase your revolving credit limits

If debt paydown is going to take awhile, use this trick to boost your credit score in the meantime: increase your credit limits.

To do this, call your credit card issuer and ask them if you can apply for a higher credit limit. If you get approved, then your credit utilization ratio will automatically improve – as long as you don’t use your increased limit.

Increase your credit limits and start working to decrease your balances. As a result, your credit utilization ratio will improve.

4. Get a credit card

There’s a lot of fear around credit cards, and for good reason. Credit card debt can be costly and take years to get out of – especially if you only make the minimum payments.

If you want to see just how long it can take to pay off credit card debt with only minimum payments, this chart posted in Business Insider breaks it all down:

how to increase credit score

That said, avoiding credit cards (or debt in general) is going to hurt your efforts to improve your credit score. Credit scores exist so lenders can estimate your likelihood of repaying money lent to you.

But if there’s no credit history to see, then they can’t make that estimation. That means they’re not as likely to lend money to you.

Go ahead and get a credit card if you don’t have one. Just don’t carry a balance on it month to month. Use it and pay it off every month, and you’ll be able to build credit without going into debt.

And if you can’t get approved for a traditional credit card, try a secured credit card. This is a credit card you put a down payment on, which makes it easier to be approved for. It’s also a great tool for establishing credit.

5. Use student loans to your advantage

Just like a credit card can help you build credit, loans can, too.

Remember that credit mix factor? It’s only 10 percent of your score, but this is where having student loans helps. If you have a credit card and a student loan, then you’re showing that you have a credit mix and can handle multiple types of credit.

Paying off your student loans – and auto loans and mortgages – also gives you an opportunity to build up a positive payment history and length of history with your servicers. Stay current on your payments and your credit score will benefit from it.

If you have trouble making your student loan payments, don’t let late payments happen before you take action. Anyone seriously struggling with federal student loans can apply for income-driven repayment plans to decrease their monthly payments.

You can also refinance your private student loans or ask your lender if they have a way to work with you when you’re struggling to make ends meet.

6. Pay rent via credit card

Speaking of payment history, the more you can have positive payment history reported on your score, the better. Therefore, if you’re a renter, use that money leaving your pocket every month to help your score. Ask your landlord if you can pay via credit card.

Just remember to pay the balance in full every month before the end of the billing period. Do not let your rent cost you money in credit card interest. Your best bet would be to pay your rent on the credit card and then immediately make a payment on your credit card for that amount.

Bonus: if your landlord lets you pay via credit card, you can use that to build credit and earn rewards if you have a cash back or travel rewards card.

If your landlord won’t accept credit cards, ask if they are signed up with RentalKharma. This credit-building tool takes into account all of your rent payments so you can improve your credit score with on-time payments.

Sign Up With RentalKharma Today

7. Review your credit report and dispute errors

Every year you’re entitled to one free credit report from each of the three credit reporting bureaus. You can get these reports at AnnualCreditReport.com.

Don’t forfeit your opportunity to check your credit report. Errors on reports, after all, are common. According to The Washington Post, since 2012, “There have been more than 158,000 complaints against the three agencies, 80 percent of which were about incorrect information on credit reports.”

Credit reporting errors can be quite costly to your credit score. Review your credit reports every year and immediately dispute anything that’s not right.

8. Rate shop wisely

There are times when you’re going to need a new loan and will want to get it at the lowest interest rate possible. But a lot of people worry about what rate shopping will do to their credit score.

If you rate shop wisely, you can ensure that it doesn’t damage your credit score. The best way to do this is to keep your loan applications to the same type of loan with the same amount during a 14-day time frame.

That way the credit reporting bureaus will fully understand that you are loan shopping and batch the inquiries so they don’t damage your score.

9. Pay off credit cards

You can pay off credit card debt more efficiently and build more credit if you consolidate it onto a balance transfer credit card or an unsecured loan. Then keep the card open to establish a longer credit history with it.

A balance transfer credit card typically comes with a zero percent interest rate for a period of six to 24 months, depending on your credit. That gives you a certain amount of time to pay on your balance interest-free.

An unsecured loan can also be a good option if you get an interest rate that’s much lower than the rate on your current card. It also helps because it has a fixed payoff date.

With either of these options, the card or loan will pay off your existing credit card or cards. If you keep the old ones open, your credit utilization and length of credit history will benefit.

10. Take care of any debt in collections

Finally, if you have debt that’s gone off to collections, don’t think that means you don’t have to pay it. Accounts in collections are highly damaging to your credit score. According to a white paper by VantageScore, accounts in collections can stay on your credit report for seven years.

Take care of these accounts sooner rather than later. Call the collectors and either get on a payment plan or offer to settle the debt.

Then, when it’s paid off, ask them to send a letter saying to the credit reporting bureaus. Be diligent about this so you can get these marks off your report ASAP.

Focus on what’s good for your money

In the end, if you simply follow best practices for what’s good for your finances, then your credit score should improve as a result.

Use credit, but pay it off before the interest builds. Pay all of your bills on time. And keep your long-standing relationships with certain banks and lenders strong by leaving accounts open. You’ll soon see an uptick in your score

The rest of these tips are great if you need a quick credit score boost, but they shouldn’t feel like too much. Do what’s good for you and you’ll do what’s good for your score.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderAPR RangeLoan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal Loans: Fixed rates from 6.990% APR to 14.865% APR (with AutoPay). Variable rates from 6.255% APR to 12.555% APR (with AutoPay). SoFi rate ranges are current as of September 1, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.255% APR assumes current index rate derived from the 1-month LIBOR of 2.08% plus 4.425% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

    To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.See Consumer Licenses.
  2. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  3. SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.
  4. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

3 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 4.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 4.99% APR loan, a borrower will need excellent credit on a loan of $15,000 with a term of 24 months, and qualify for at least two of the following discounts: (1) add a co-borrower who has sufficient income; (2) use at least fifty percent of the loan proceeds to directly pay off existing debt; or (3) show proof of having at least forty-thousand dollars in retirement savings – contact FreedomPlus for further details.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 34.49% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.

7 Important Disclosures for Earnest.

Earnest Disclosures

  1. Earnest does not lend in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.

8 Important Disclosures for Avant.

Avant Disclosures

* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.

** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

7.73% – 29.99%$1,000 - $50,000

Visit Upstart

6.26% – 14.87%1$5,000 - $100,000

Visit SoFi

6.99% – 35.97%*$1,000 - $50,000

Visit Upgrade

5.99% – 24.99%2$5,000 - $35,000

Visit Payoff

4.99% – 29.99%3$10,000 - $35,000

Visit FreedomPlus

5.99% – 18.99%4$5,000 - $50,000

Visit Citizens

15.49% – 34.49%5$2,000 - $25,000

Visit LendingPoint

6.16% – 35.89%6$1,000 - $40,000

Visit LendingClub

6.99% – 18.24%7$5,000 - $75,000

Visit Earnest

9.95% – 35.99%8$2,000 - $35,000

Visit Avant

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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