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Improve your credit score

Many pieces make up your credit score, here’s how you can work to improve it.

Throughout your life, you’ll apply for various forms of credit that include loans, credit cards, utilities and even wireless bills. Your ability to manage these accounts is recorded on your credit report.

Your credit score forms the backbone of your overall credit history. It’s a summary of your borrowing history that lenders use determine whether you’re a good investment choice and can pay off your balance each month.

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Our guide teaches you about the information that goes into your credit score — and how you can to improve it.

What is a credit score?

A credit score is a numerical representation of your credit history. In the United States, your credit score is calculated by credit bureaus that include the “big three”: Equifax, Experian and TransUnion. Each credit-scoring bureau uses different criteria for measuring your credit score, weighing your history against a proprietary algorithm.

Lenders and credit providers use both your credit score and the information in your credit report to make decisions about whether you’re a reliable borrower. Finding out your credit score can tell you where you fall in the credit landscape, from poor to excellent credit, and how your overall financial health is viewed by potential lenders.

How does a credit score work?

Your current credit score is a useful number to know before applying for credit. In the United States, your credit score is calculated by credit bureaus that include the “big three”: Equifax, Experian and TransUnion. Each credit-scoring bureau uses different criteria for measuring your credit score, weighing your history against a proprietary algorithm.

Lenders and even the bureaus weigh the information in your credit history differently, but they’ve widely adopted two scores: FICO Score and VantageScore. Both weigh the same factors when determining your credit score, including how long you’ve had credit, your payment history, your credit utilization ratio and how many loan and other types of credit you carry.

Today, FICO Scores are used in 90% of credit decisions, which makes it a good barometer of how potential lenders might see you when determining approval.

Credit ratingHow a lender sees your credit scoreFICO ScoreVantageScore
ExcellentAn adverse event is highly unlikely to harm your credit in the next 12 months.800 or higher781 or higher
Very goodYou’re more likely than the average American to maintain healthy credit, and it’s unlikely you’ll incur an adverse event in the next 12 months.740–799720–780
GoodYou’re less likely to declare bankruptcy, miss a payment on a debt or have a judgment against you, indicating less likelihood of a default.670–739658–719
FairYou’re likely to incur an adverse event such as a default, bankruptcy or something similar in the next year.580–669601–657
PoorYou’re highly likely have adverse events listed on your credit report within the coming year, including court judgments, bankruptcies, insolvency or defaults.579 or lower600 or lower

How is my credit score calculated?

You have multiple credit scores, as each one is calculated differently depending on the credit reporting agency. In general, each of the factors below can determine your overall credit score.

  • Your personal information. Your age, how long you’ve been employed and the time you’ve been at your current address can each affect your score.
  • The age of your credit report. A credit report that’s been active a long time can improve your score.
  • Your payment history. Whether you’ve paid past and current credit accounts on time is a major factor in your overall score.
  • Your credit utilization ratio. Experts advise carrying a balance with a utilization of 30% or less. For example, if your credit limit is $1,000, keep your balance below $300, which is 30% of your limit.
  • Type of credit providers. For instance, holding an account with a bank carries a different level of risk than a store finance provider.
  • The number of listed credit inquiries. Frequent applications for credit raise your risk index and lower your credit score.
  • Liens and other judgments. An indicator of increased risk, civil judgments can decrease your credit score.

How can I improve my credit score?

Improving your credit score can be a slow process, but it could help you get financed down the road with more flexible options and better borrowing terms.

  • Order a copy of your credit report. Request a free credit report from the major bureaus to stay on top of making sure that lenders see only the most accurate picture of your financial health. Confirm that your personal information, employment data, open accounts and balances and other financial details are current and accurate. If you discover any errors, dispute them with the three credit bureaus and the provider that reported them.
  • Pay down your credit card accounts. Your overall credit score is determined by many variables, including your credit utilization rate. To indicate to lenders that you’re a responsible borrower, only carry a balance with a utilization of 30% or less. For example, if your credit limit is $1,000, keep your balance below $300, which is 30% of your limit.
  • Don’t attempt to open new accounts until your score improves. Every time you apply for credit, it’s listed on your credit report and pulls down your score. By waiting, you can take advantage of better interest rates.
  • Avoid hastily closing unused accounts. While this sounds like a good strategy in theory, having only newer accounts will result in a lower score. Lenders want to see a long history of credit in your report.

Quick tips to improve your credit score

  • Forward your mail after a move. Set up mail forwarding with USPS and provide your new address to banks, utility companies, phone companies and other lenders so that your bills are redirected to the new address.
  • Commit to a budget and timely payments. Take a deep look into your finances to understand how you might be able to lower your debt-to-income ratio and overall debts. If you can successfully continue to make on-time payments, not only will you avoid late fees — but your credit report will also reflect that you can successfully manage your finances.
  • Consolidate your debt. Consolidating several loans into one can streamline your payments and help you save on fees.
  • Manage your credit report. Some credit reporting bureaus offer monitoring services that will notify you any time there’s a change in your credit score and information in your report. These services could be helpful in staying on top of your overall financial well-being.

How can I deal with incorrect listings on my credit report?

To correct errors in your credit report, it can help to contact both the credit reporting bureau and the source of the mistake — either the bank, credit card provider or lender who reported it.

  1. Contact the credit reporting bureau. By speaking with a representative, you may be able to remove the error or convince the bureau to contact the credit provider on your behalf to have it removed.
  2. File a dispute online. Each of the credit reporting agencies offer the ability to dispute errors in your credit report online.
  3. Contact the credit provider. The provider or lender should have a dispute resolution team or process in place to fix incorrect listings.
  4. Contact the CFPB. If you’re not able to resolve the issue on your own, submit a complaint to the Consumer Financial Protection Bureau, an independent federal agency built to protect consumers.

Common questions about credit scores

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Adrienne Fuller

Adrienne Fuller leads the publishing team at She has one goal: to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. When she's not helping folks save money, she's hiking with her two Catahoulas around her home in San Diego.

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