Improve Your Credit Score

Team Equitee

What’s a Credit Score?

Your credit score is an assessment of your credit worthiness. It shows potential lenders, like banks and credit card issuers, how you’ve handled credit in the past. It also projects how they think you would handle additional credit in the future. Your credit score impacts the decision of approving or denying an application for credit. It also impacts the interest rate you’ll be charged on credit cards and loans. Improve your credit score and your (financial) life improves! We’ve talked previously about how your credit score is calculated in-depth. Today, let’s focus on how to improve your credit score.

Your credit history drives your credit score. A credit history details your payment history for installment loans (like student, auto and home loans) and retail loans (credit cards).The main credit bureaus – Experian, TransUnion and Equifax – don’t actually calculate your credit score. Instead, they provide others with their version of your credit history.

Improve Your Credit Score - Equitee


Credit Score Ranges

Credit scores typically range from 300 to 850. You’ve probably heard people say someone has “excellent” or “poor” credit. Scores may be characterized slightly differently because there are a number of companies that provide credit scores. For a rough starting point, though, here is a quick guide to credit score ranges.

Excellent – from about 720 to 850;

Good – from about 690 to 719;

Fair – from about 640 to 689;

Poor – from about 600-639;

Bad – below 600

Where do I Get My Credit Score?

Per the Consumer Finance Protection Bureau (a great consumer resource) – to obtain your credit score:

  1. Check with your current credit card issuer or look at a current loan statement to see if its provided.
  2. Talk to a non-profit credit counselor.
  3. Use a credit score service. Many services and websites advertise a “free credit score.” Some sites may be funded through advertising and not charge a fee. Other sites may require that you sign up for a credit monitoring service with a monthly subscription fee in order to get your “free” score.
  4. Buy a score. You can buy a score directly from the credit reporting companies.

Step One – Is My Credit Score Right? 

First, make sure your credit history is being reported correctly.

  • Get a copy of your credit report from one of the three main reporting bureaus. You can request a free copy of your credit report from each of the bureaus (Experian, TransUnion and Equifax) on an annual basis at annualcreditreport. Start by requesting just a single report to see if there are any obvious mistakes. If so, dispute any errors with the credit bureaus (Experian, TransUnion and Equifax).
  • Negotiate any issues you can – if you missed a payment when you were out of work or had a serious personal issue, call your debtor and see if you can get them to make a change on their report to the credit bureaus.
  • Double-check the credit limits on credit cards are what you expect – you want to make sure the limits are correct.

Your credit score is based on your credit history and represents the “big picture” of how you handle credit. Like a big ship, your credit score takes some time to move. There are, however, some immediate actions you can take to improve your credit score.

Quick Steps to Improve your Credit Score

  • Start reducing your debt. How can you do that? What expenses can you cut back on without a lot of pain? Start small by reducing things like the occasional meal out, or having one less fancy coffee drink. In addition to cutting back, look at adding a little more income. Can you pick up few extra $’s on the side? Remember, an extra $100 a month means $1200 a year, plus the interest you save if you pay off a debt.
  • Call your credit card issuers and ask for an increase in your credit limits. Your credit score includes a measurement of your credit utilization – basically, the percentage of outstanding credit you’re using. Reduce your card utilization and your score will improve. If you can’t trust yourself not to spend extra money because you see a higher credit limit, do not do this!
  • Determine your long-term strategy to reduce your debt. One approach is to go after your highest interest credit cards to save yourself the most money. Some find attacking small credit card or loan balances and reducing the number of outstanding debts works better for them. Either approach can work – the key is to “just do it.”

Long-term Efforts to Improve your Credit Score

Your credit history is a long-term view of your payment habits. You should take a long-term view, as well. Financial fitness is like physical fitness, it takes discipline and consistent effort. There are ups and down, the key is to keep yourself heading in the right direction. Here’s some suggestions to improve your credit score for the long-term:

  • Avoid overextending yourself (consider a quick budget to better understand your financial status).
  • Pay bills on time, every time.
  • Keep your credit card utilization rate down (less than 30%). That means if you have a total of a $3,000 credit limit, keep your outstanding balance under $1,000. Heads up – even if you pay off your bills in full every month, your credit issuers may report during a time in the month when you have an outstanding balance. You may want to pay twice a month if this is an issue (even for a little while).
  • Don’t close credit cards, even if you decide you’re trying to get your financial house in order. Take advantage of the credit limit on an unused card to make your credit utilization look better. As always, however, if you can’t do this and not put on new charges, the benefits do not outweigh the risks.
  • Only apply for and open new accounts as needed.
  • Pay off debt rather than moving it around. Pay bills on times and user your credit responsibly – not just for the short-term score improvement, but your long-term financial health.
  • Set up automatic payments or reminders set up on all payments – don’t get dinged because you forget about an upcoming bill.
  • Don’t open a lot of new accounts too rapidly.

If you have other ideas to improve your credit score that have worked for you or your friends and family, please share with us!



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