How to Improve a FICO Credit Score

by Neil Kokemuller ; Updated July 27, 2017
Person's credit history stored in a blue binder.

Improving your FICO score generally means demonstrating responsible money management and use of credit. Several factors, including payment history, balances owed and length of credit, impact your credit score. Therefore, the best strategies to improve your score are the ones that most positively affect these scoring categories.

Find Any Mistakes

A review of your credit report is a good starting point for improving your FICO score. Consumers are entitled to one free copy of their credit report from each of the three major credit reporting bureaus each year. People do find errors in their credit reports and with some diligence, can get them corrected. If you identify an error, such as a balance that has already been paid off or a delinquency that should have expired from your report, you can dispute it with the reporting agency and credit bureau. Most negative marks should expire within seven years of occurrence, and bankruptcies should disappear after 10 years.

Borrow and Pay

Avoiding credit use isn't a good way to improve your FICO score when you have had credit problems. In fact, using your accounts responsibly and making on-time payments is a great way to boost your score over the long run. Make a few small purchases on your credit cards each month and pay the balance immediately. Payment history impacts 35 percent of your FICO score. Parents can help a grown child who has damaged credit by adding him as an authorized user on their card. Doing so typically means the user gets credit for on-time payments as well. This strategy doesn't quickly gain you points, but it is one of the best long-term approaches to build and maintain a favorable rating.

Expedite Your Payoffs

Paying more than your minimum monthly payments and quickly paying down loan balances is another great way to boost your score. Balances owed, which includes your debt-to-limit ratios, affects 30 percent of your FICO score. Keeping all cards below a 30 percent utilization ratio helps you maintain a good FICO score, while ratios below 10 percent help optimize your rating. If you have a limit of $2,000 on a card, a 10 percent ratio means you have a balance of $200. Paying down balances on any card with a high ratio offers a significant boost.

Keep Your Accounts Open

It is tempting to close any accounts in which you don't carry a balance, but this move is actually problematic for your credit score. Length of credit history is another of the most important FICO scoring factors. Therefore, it is better to leave accounts open, especially when it is an older account. Closing an account with a bad history doesn't eliminate that history from your report anyway. Only time leads the removal of negative credit reports.

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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