15 Factors That Positively Impacts Your Credit Score

1. Choose a Secured Credit Card and Pay it Off Frequently

Secured credit cards are great tools to help you build up (or rebuild) credit with the three credit reporting agencies Experian, Equifax, and TransUnion. By making a deposit of typically $250-$500, you gain a credit line of the same amount (or sometimes higher). 

You should use the card for purchases then pay it off as often as possible. This will establish good timely paying history, which gives you points in that most important category of payment history (counting for 35 percent of your credit score). 

Remember to keep your credit utilization on the card to less than 30 percent (for the credit utilization component of 30 percent of your credit score)

2. Get More Credit

If you do this judiciously, it can positively impact your credit score. The reason is because more available credit can translate to a lower total credit utilization amount (30 percent of your credit score). The key with this is not to apply for too much credit all at once, as this creates hard inquiries on your credit reports (too many negatively impact your new credit component of 10 percent). 

Try to get different kinds of credit since this impresses the credit bureaus. Store accounts, credit cards, auto loans, and mortgages all contribute to the credit mix category (counting for 10 percent of your score).

3. Raise Your Credit Limits

The more available credit you have, the better you look to the credit scoring algorithms. Your ultimate goal is to keep your credit utilization down to less than 30 percent. This is easier to do when you have $2,000 in total available credit rather than only $1,000. Higher credit limits that you do not overuse show the reporting bureaus that you are more capable of successfully managing debt and credit. 

The credit utilization category is the second most important with FICO and a close third for Vantage Scoring models. 

4. Charge Small Amounts to an Inactive Credit Card

If you allow months or perhaps even years to lapse between charges on an inactive credit card, the issuer will likely close it. This would hurt you in two ways. It would reduce your total available credit, increasing your total credit utilization (the 30 percent component). 

If you have $2,000 charged on $6,000 in available credit, this is 33 percent utilization. Should one of your creditors close a $1,500 card that you do not use then your utilization increases to $2,000 over $4,500, a far higher utilization rate of 44 percent. 

Lower is always better with this utilization number. The 33 percent utilization is almost at the maximum level the scoring models want to see, while 44 percent is definitely considered high and is penalized.

Having an inactive account closed would also lower your credit accounts average age (the credit history component counts for 15 percent). Avoiding this danger is easy. Take any inactive credit cards out when you shop to make at least small routine charges to them. This will keep your creditor happy and improve your credit score.

5. Pay Off High-Interest Credit Accounts First

If you are carrying balances on your credit cards, there is a definite strategy to smartly paying them down. You should always attack the highest interest rate balances first. Higher interest charges are increasing the total debt you have each month, damaging your credit utilization component. 

Paying these down first will reduce the amount of time it takes to get your debt erased and under control. 

6. Get a Credit Builder Loan

One of the easier ways to improve your credit score is by varying your credit mix. You can get more points in this component that counts for 10 percent by applying for a credit building loan. Be sure you make all of your loan payments on time, and this will also help out your most important component of timely payment history (35 percent of credit score).

7. Pay Off A Debt

By eliminating one of your debts, you successfully reduce your credit utilization component that counts for 30 percent of your score. This also raises your available credit, a component that Vantage Scoring model considers. It will give you additional points in your most important payment history component as well. 

8. Remove Recent Late Payments

Creditor bureaus are not required to remove late payments unless they are reported mistakenly in error. You can always approach your creditor and ask them to take off a late payment from your credit report though. You can do this over the phone or in writing. 

If the creditor removes the late information, then it will disappear from your credit reports. 

Be sure to provide any good explanations for why you were late. It might be that you suffered a financial hardship like going to the hospital or a natural disaster. The late payment might not have been your fault (and you have documentation to prove the bank error or other cause). 

If you always pay your bills in a timely fashion, explain to them that it was an inadvertent, one time mistake. 

When you have something to offer the creditor in return for helping you out, this may increase their willingness. You can offer to pay down (or off) a loan in exchange. You lose a number of points for a late payment in the payment history component, so anything you can do to get this removed can help you significantly.

9. Remove a Collection Account

Collection accounts equate to charge offs. These cause serious damage to your credit score. You can contact the original creditor and offer to pay them the full balance in exchange for them retracting it from collections. They may be willing to accommodate you to have the debt paid off. At the very least, they will have to report your debt as paid in full when you cover it. 

10. Pay Off a Past Due Balance

Past due balances negatively impact your credit score in the most crucial payment history category (35 percent). The longer they are negative for, the worse they harm your score. The balance will show as current once you bring the account up to date. Paying it off will help your score to improve even more. 

If a past due balance is only an isolated event, FICO will not penalize you for it under their newest algorithm versions FICO 8 and FICO 9.

11. Pay More Than One Time in a Billing Cycle

Paying more frequently (than once in a billing cycle) will help to keep your credit utilization amount down. The reason is that your statement balance is the one reported to the credit bureaus. By reducing this number, you can effectively lower your credit utilization. 

Remember that your goal is to keep this number to less than 30 percent and ideally under 10 percent (for 30 percent of your credit score component). 

Making extra payments will also help you to pay off any balance you are carrying sooner and reduce significantly the amount of finance charges you are assessed. 

12. Dispute Any Credit Report Errors

Credit report errors are a fact of life. They can have an impact on your credit score needlessly. The answer is to frequently check your own credit reports for accuracy. If you see mistakes, go online to the credit reporting bureau website right away and file a dispute. It can take the bureaus up to a month to investigate and correct these errors, so do not put it off.  The websites for this are:

13. Pay Down Revolving Balances to Less than 30 Percent

The credit scoring models are heavily concerned with how much of your available credit you utilize (counting for 30 percent). They want to see less than 30 percent used. If you have $5,000 in available credit, then this means keeping a balance of under $1,500 at the end of each month. You can pay down one or more of your balances even before the statement is issued to accomplish this. 

Ideally you should try to keep this credit utilization number to even less than 10 percent for maximum points in the category. 

14. Use an Eligibility Checker

When you are considering applying for new credit, you want to be careful to avoid too many hard inquiries on your credit reports. This is a component of your score that counts for 10 percent. The way to shop around without harming your credit score is to utilize an eligibility checker before applying. This way you will be able to reduce the number of creditors to whom you apply for credit. 

Tools like the eligibility calculator at Money Savings Expert will even give you a percentage chance of being approved for the cards you query about without needing to have any hard inquiries on your reports. They also help you to choose the cards that are best for your personal circumstances to narrow down the crowded credit card field.

15. Use a Co-Signer

If you are new to a credit history or trying to rebuild a damaged one, a simple way to get better loan and credit card approvals is by utilizing a co-signer. A family member or friend can help you with this if they have strong credit. You receive the benefit of having the loan or credit on your credit report by “borrowing” from their good credit. It will also help you to benefit from more advantageous terms and lower interest rates on the loan or credit. 

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