How to help raise your credit score
For better or worse, credit checks are a fact of life. If you apply for a credit card, rent an apartment or apply for a car loan, the potential lender will likely assess your creditworthiness. But what if your credit score isn’t what you want it to be? The good news is that there may be steps you can take to help raise your credit score.
What is a credit score?
Credit scores rate your creditworthiness. These three-digit numbers give creditors a quick read of your credit behavior over time. That's why lenders, including credit card issuers, request credit scores when they make decisions about granting a line of credit.
How are credit scores calculated?
Two of the common credit score calculation methods run through FICO® and VantageScore®. Each runs credit report data through a proprietary formula, resulting in a three-digit credit score. Interestingly, FICO was the only name in town until 2006 when the credit bureaus got together to create VantageScore.
What do credit score ranges mean?
FICO and VantageScore assess credit scores based on their credit score ranges. Here is how each of these scoring models break out their categories, from Poor to Exceptional:
FICO credit score ranges are:
As of May 2024, VantageScore® credit score ranges are:
- Excellent: 781 to 850
- Good: 661 to 780
- Fair: 601 to 660
- Poor: 500 to 600
- Very Poor: 300 to 499
As of May 2024, FICO®:
- Exceptional: 800+
- Very Good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 579 and below
How credit works
Credit works in a cycle, and it starts with applying for credit. When applying for credit, a lender determines the amount of credit they’re willing to grant you as a credit limit. The lender also defines your interest rate based on your credit score among other factors.
Once granted, that line of credit creates an opportunity to build credit history. This payment behavior creates a record that adds data to your credit report. That report continually fuels your credit score calculation. The cycle then starts again when you next apply for a line credit.
What hurts your credit score the most?
Payment history accounts for 35 percent of a FICO score. So, late payments tend to hurt a credit score significantly. But several other factors may also cause a drop in your credit score, such as:
- Closing a credit card account — especially an older one.
- Identity theft or fraudulent usage of your account.
- Applying for multiple credit lines at once in a short period of time.
Frequently asked questions about credit
There are a few steps you can take that may help improve your credit score, whether you’re new to using credit or hold several accounts:
1. How do you build credit from scratch?
There are ways to start building credit as a beginner. For example, by being an authorized user. An authorized user allows you to build your credit history even if you have no prior experience. You are allowed to use a primary cardmember’s credit card and, if payments are made on time and in full, this can help build your score. That’s because payment history is an important factor used to generate your credit score.
2. Does debt consolidation hurt your credit score?
There are ways debt consolidation may have a negative impact on your credit score. For example, using a consolidator typically involves a hard check, which can work against your score.
3. Does getting a new credit card help my credit?
Getting a new credit card can help or hurt your credit, depending on your credit situation as well as what type of card you’re seeking. If it's time to establish credit, some cards may help you get started. For example, a student card (which is not offered by Chase) could be an entry point for someone in college who wants credit. This might serve as a kickoff to their credit journey if used responsibly. However, a hard credit check is run by credit cards applications so your score can be temporarily hurt.
4. How will paying off credit cards improve my score?
Paying the balance on your credit card bills on schedule can have a significant impact on your credit score. The FICO score tends to give payment history the most weight in their accounting method.
5. Using a credit monitoring service
There are ways to help stay on top of your credit rating with a monitoring service. In fact, some ways are user friendly. Credit monitoring can help track your credit accounts. A monitoring service, like Credit Journey®, can also alert you if your personal information was involved in a data breach.
In summary
You now know more about the factors that can help raise your credit score. Turns out that raising a credit score isn’t only about paying down balances. From checking your score to using a credit monitoring service like Credit Journey, there are resources to help guide you through the process.
