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How to Improve your Credit Score

May 28, 2014 | Personal Finance

How does it work?

It is important to understand how your credit history works before you try to improve it. While it doesn’t take a lot to get back on track, you have to know where to start.

Your credit history is a record of how you have paid back loans, debt levels and your access to credit. Three different agencies collect and store information about your credit record. These agencies are Equifax, Experian and TransUnion.

Your credit report helps lenders determine if you are deemed credit worthy. It can be accessed by landlords, employers, insurance companies, credit card companies, auto finance lenders and government agencies only with your permission. This type of access is called a hard inquiry. When you request your own credit report, it is considered a soft inquiry.

Keep in mind, these hard inquiries are recorded on your report and too many can negatively impact your credit score. So, it is important to keep track of who is checking your credit, and how often your credit is checked.

The score ranges for each agency are as follows:

  • Equifax – 280-850
  • Experian – 330-830
  • TransUnion – 300-850

FICO Score

If you’ve been keeping up with our blog, you know your FICO score is the most widely used credit score. Again, you have three different scores, one for each credit agency. A score of 750 is considered excellent, and scores below 650 are poor. The ideal FICO score you should aim for is 720 or above. An excellent credit score will enable you to receive the best interest rates and repayment terms on loans. See the FICO range below.

  • Excellent or Very Good-700+
  • Good-680-699
  • Average-620-670
  • Below Average-580-619
  • Poor-500-579
  • Very Poor-499 and below

6 Ways to Improve

1)      As mentioned earlier, make sure you check your credit reports—yes ALL three! Is your history accurate? Are there any errors or suspicious activity noted? If so, act quickly!

2)      Pull your FICO score. Your credit report does not contain it. It will cost you about $19.95 at, but it’s worth it.

3)      Pay your bills on time. The most important factor in the FICO score is your payment history, which accounts for 35 percent. Lenders want to know if you you’ve paid your past credit accounts on time. Automatic payments will ensure that you never make a late payment.

4)      Pay down high balances. Even if you pay your credit cards off in full, the total amount of your last statement is what will normally show on your credit report.

5)      Be precautious about applying for new credit. Applying for too many credit cards or loans at one time will not be good for your score. However, older accounts with higher credit limits will help your score. If you don’t use them, it’s okay to keep them open. Remember 10 percent of your score is new credit and credit inquiries.

6)      Stay away from credit repair scams. If you have poor score, nothing and no one can repair it besides you. Pay your bills on time and your score will, slowly but surely, repair itself in time.


The information provided is for informational purposes only and is not a substitute for professional financial advice. You should consult a credit counseling professional concerning the information provided and what should work best in your financial situation. And any action on your part in response to the information provided is at your discretion.

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