How to Improve Your FICO Score
Molly is a finance writer based in Portland, Oregon. She also covers software and environmental issues and is always on the lookout for a good vegan donut.Read full bio
At a Glance
Lenders use your FICO score to predict your future behavior and guide loan decisions, like whether you should get a bigger credit line. It gives banks a fast, streamlined way to assess whether you should get a loan, and under what terms.
Learn more about the best ways to boost your credit, including:
- Check your credit regularly
- Dispute inaccuracies
- Pay off most recent debts first
- Pay on time whenever possible
- Keep your credit utilization low
- Keep accounts open
- Have a good credit mix
- Only borrow what you need
What is included in a FICO score?
Three main credit bureaus—Equifax, Experian, and TransUnion—maintain your credit report. Your credit report uses the following information to calculate your three-digit FICO score:
- Payment history (35%): One of the biggest factors that determines your FICO score is making on-time payments, plus any public history of accounts in collection or bankruptcy.
- Amount owed (30%): Your credit utilization rate is the percentage of available credit you’re using. The less you owe to lenders, the better your score.
- Age of credit (15%): The longer you have your credit accounts open, the better.
- Credit mix (10%): Having different types of credit accounts, including revolving credit and installment loans, can boost your score.
- New credit applications (10%): Opening new accounts over a short time can make you look like a higher risk to lenders, and hard credit inquiries can hurt your score.
What is considered a good score?
FICO scores range from 300 to 850. The higher your FICO score, the better your credit. Here’s how FICO breaks down the scores:
- 800 and up: Exceptional
- 740 to 799: Excellent
- 670 to 739: Good
- 580 to 669: Fair
- 579 or lower: Poor
How to increase your FICO score
1. Check your credit regularly
According to the Federal Trade Commission, “one in four consumers identified errors on their credit reports that might affect their credit scores.” Keep this in mind and check your credit report at least once a year. See if something looks off, or if it’s time to change your habits to boost your FICO score.
Here are five ways to check your FICO score for free:
- Banks: If you’re a customer of a participating bank, your FICO score might appear on your loan or credit card statement. Or, you may be able to view it by logging in to your account.
- Credit card companies: Check with your credit card company to see if they provide free credit checks.
- Financial counselors: If you are using a credit counseling service, you can usually get your FICO score for free.
- Credit unions: Some credit unions also give free scores to members.
- Lenders: If you have student loans, auto loans, or a mortgage, you might be able to get a FICO score for free from your lender.
How often are FICO scores updated?
Creditors report your activity to the credit bureaus every 45 days. Activity includes credit card balances, payments made, amount of debt, and credit applications. Creditors don’t report at the same time, though, which means your credit score can change weekly or even daily.1
2. Dispute inaccuracies in your credit report
If you see errors in your credit report, request a correction immediately. Dismissing even one late payment from your credit report can improve your FICO score.
You’ll find contact info for both the credit bureau and the creditor in your credit report. You may need to provide documents to support your claim (send copies, never originals). The law requires credit bureaus to investigate your request within 30 days. They’ll notify you of the results within 45 days.
3. Settle accounts taken to collections
Having accounts sent to collection agencies is terrible for your credit score. To improve your FICO score, address recent debts first (those within the last 24 months).
Be careful repaying old debts
While older debts have less impact on your FICO score, there’s a hitch. Repaying a collection account that’s older than 24 months makes the account “recent,” which could damage your FICO score. In this case, negotiate with your creditor. You may be able to settle by offering to pay your full balance.
And be sure to get a debt verification letter before you pay. Banks often sell loans to other banks, and you don’t want to repay the wrong lender.
4. Always pay on time
Payment history holds the most sway when it comes to your FICO score, accounting for 35% of your score. Late payments–even a few days–can stay on your credit report for years. Delinquency applies to student loans, car loans, credit cards, rent, and utilities. Paying bills on time shows creditors that you’re reliable.
To improve your FICO score:
- Set up automatic payments whenever possible. Use calendar reminders to keep yourself on schedule.
- Repay past-due bills as soon as possible, starting with the most recent. As you establish consistent payments, your FICO score should increase. The impact of older late payments fades as time passes.
- Reach out to a non-profit credit counseling agency if you’re having trouble making payments. The agency won’t boost your credit score, but counselors can get you on the right path sooner. Contacting a credit counseling agency will not hurt your credit score.
5. Maintain a low credit card balance
Credit utilization—or the amount of debt you owe—determines a significant chunk of your credit score, so you want to use as little of your credit limit as possible. The general rule of thumb floated on the internet is not to use more than 30% of your total credit limit, but you’ll want to use much less to keep your score up.
To improve your FICO score:
- Reduce your credit debt. Start making multiple payments each month or limit your credit card use.
- Ask for a credit limit increase. Approval hinges on your payment history. (Take care that this doesn’t lead to more spending.)
- Get added to someone else’s credit card. Become an authorized user on another’s account—someone who pays their bills on time.
6. Keep accounts open
As long as you’re not paying a hefty annual fee, don’t rush to close an account once you’ve paid it off. Keeping older accounts open shows a longer credit history—and 15% of your FICO score depends on the age of your accounts. (Bonus: Keeping open accounts also decreases your credit utilization ratio.)
7. Have a mix of credit…
Having a mix of credit shows that you can responsibly use credit. Varying your credit with credit cards, student loans, and car loans can boost your FICO score.
8. …But don’t borrow more than you need
This step may feel in conflict with those above. But applying for new credit creates a hard inquiry—and too many hard inquiries could imply you’re in financial trouble. Hard pulls can especially hurt your FICO score if you don’t have a strong length of credit history.
If you need credit, though, borrow what you need. A hard inquiry only stays on your report for two years, and its impact on your score will decrease over time.
How long will it take to rebuild credit?
Increasing your FICO score takes time—and sometimes, the best thing you can do is pay your bills and wait. Luckily, negative information won’t stay on your credit report forever. Inquiries, late payments, and public record items—like bankruptcy, judgments, liens, lawsuits, foreclosures—only stick around for a set period of time.
- Hard inquiries: 2 years
- Delinquencies: 7 years
- Public record items: 7-10 years