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Tips for Improving Your Credit Score

Tips for Improving Your Credit Score

Are you considering applying for a mortgage at some point in the near future? If you are, it is probably a good time to review your credit information and perhaps take steps toward improving your credit score.

While a credit score is not the only factor that lenders take into consideration when determining whether you qualify for a home loan, your credit score plays a big role in the amount of interest you’ll pay on a loan. An improving credit score is important not only because it can help you qualify for a loan, but it also may help you get a better deal and save money by landing a lower interest rate.

If you are concerned about your credit score, there are certainly steps you can take to improve it. But first, let’s look at how credit scores work.

What is a Credit Score?

To put it simply, a credit score is a number that reflects how trustworthy you are when it comes to paying your debt as agreed. While scores can be calculated a few different ways depending on the service used, here are a few common elements factored into your credit score:

  • Payment history - do you pay your bills on time? 
  • Number of open credit lines  
  • Debt you owe
  • Utilization ratio - how close do you come to reaching your credit limit every month? 

Your score is determined based on the information provided in your credit report. It is reflected as a three-digit number, generally between 300 and 850. A higher number is a higher credit score, meaning you are better at paying your debts than someone with a lower credit score.

Typically, a mortgage lender will use what’s known as a tri-merge credit report when reviewing your creditworthiness. This report provides the lender with detailed information and credit scores from the three major credit bureaus (Equifax, TransUnion, and Experian) combined into a single report.

When using a tri-merge credit report, lenders commonly use the middle of the three scores. When there is more than one borrower, lenders will use the lowest of all the middle scores for qualification purposes.

However, if you have a less than perfect credit score, you may want to consider improving your credit score so you can get the most competitive interest rates available.

How to Improve Your Credit Score

It doesn't take as long as you might think to improve a credit score. One thing it usually requires is increased financial responsibility, but there are a few others practices you may not even realize could positively affect your score.

Here are some tips that may help boost your score:

  1. Request your credit report and review it for errors or fraud

Typically, you may request a free credit report each year from each of the three major credit reporting agencies through However, due to the COVID-19 pandemic, people can now get a free copy of their credit report every week, through at least April 2022.

Once you’ve received it, either digitally or in the mail, review it and see if there is any inaccurate or missing information. This is also critically important to ensure you haven’t been the victim of identity theft. If you find items on your credit report that appear to be fraudulent, you can place an identity fraud alert on your credit report for free for one year. This will make it more difficult for identity thieves to open a new account in your name as the company issuing credit will be required to verify your identity before opening the new account.

If you find inaccurate info on your credit report, report it to the credit bureaus immediately so the issue can be addressed. You can also contact the creditor or lender directly to resolve the issue. When an error is fixed on your credit report, your score can improve right away.

  1. Make sure to pay all your bills on time

Making your payments on time is a significant contributing factor when determining your credit score. One way to ensure you pay your bills on time is to not spend more than you can afford to pay back. Beyond that, it’s about simply remembering to pay the bills. Online banking makes this incredibly easy. You can set up automatic payments or schedule text and email reminders to alert you when payments are due. A late payment will remain on your credit report for years, but the impact on your score will dwindle over time.

  1. Reduce debt you owe on your credit cards

If you are trying to improve your credit report, it’s important to spend less than you make, if possible. Reducing your credit card debt, for example, is a good way to improve your credit. A utilization ratio, expressed as a percentage, reflects the amount of money you spend per month as compared to your credit limit. Nearly maxing out your credit card(s) every month will have a negative impact on your credit score, even if you pay your bills on time. Lenders want to see you spend responsibly. Ideally, your credit card balances should be below 30% of your credit limit.

  1. Don’t close any credit cards

Despite what you may think, canceling a credit card may actually hurt your credit score because it reduces the amount of credit you have available. Plus, the closed account will remain on your credit report and could factor in when calculating your score.

  1. Don’t apply for any new lines of credit

Opening too many lines of credit, especially in a short amount of time, can hurt your credit score. Lenders may view that as a red flag, making you appear less financially responsible. Taking out new debt or large loans could lower your credit score, just the opposite of what you want.

  1. Establish a positive credit history

Your credit score reflects the frequency with which you pay off your debt on time. If you have not had a credit card for very long, you will not be able to demonstrate a history of responsible spending and on-time payments. It’s important to establish a pattern so lenders know you are creditworthy. Even if you are not planning to buy a home soon, it may be a good idea to start building credit now. You'll be grateful down the road when you may receive a lower interest rate on your mortgage.

It's important to note that some of these credit score tips may take longer to impact your credit than others. Building credit is a long-term project and something that you should always be aware of.

However, it may be possible to improve your score quickly by taking certain steps.

How Fast Can You Raise Your Credit Score?

It depends on your current credit score. People with lower credit scores will be able to raise credit scores more quickly compared to those who already have a strong score. Of the six tips we discussed earlier, paying your bills on time and reviewing your credit report for errors will have the biggest immediate impact on your credit score.

In fact, it is possible to increase you credit score in as little as a month. As for how, let’s discuss.

How Can I Raise My Credit Score in 30 Days?

Beyond paying your bills on time and checking your credit report for issues or mistakes, the best thing you can do to improve your credit score quickly is paying down any credit balances you are carrying, specifically your credit cards. If you carry a monthly balance on your credit card (or credit cards), try to pay it down as quickly as you can. You will likely see an improvement to your credit score within a month after decreasing that outstanding debt.

Also, it’s important to resist the urge to close some of your current credit accounts. Closing your accounts may seem like a good idea, but it will negatively impact your credit because the length of time you’ve had an account open is a contributing factor to the calculation of your credit score. So, don’t close that account unless you have a good reason to do so.

You might also be wondering just how high your credit score can go. Credit scores range from 300 on the low end to a maximum of 850, but can someone actually have an 850 credit score? Let’s see.

Is It Possible to Get an 850 Credit Score?

Yes, it is possible to have a perfect credit score, but it’s pretty rare. Just how rare? Approximately 1% of those with a credit score have a score of 850. Given those figures, it may seem virtually impossible to get an 850 credit score, but it can be done.

To move your credit score towards that “exceptional range,” you should focus on making consistent on-time payments for multiple years. Carrying little monthly debt will also help, which means paying off most of your accounts in full each month. That definitely applies to credit cards, which you should pay off in full each month if you can.

Another way to seriously increase that credit score is having a lengthy credit history (having some accounts open for 10 or more years will help considerably).

Also, it’s important to know what applying for any new form of credit (credit card, loan, etc.) will actually decrease your score slightly. Limiting your applications for new credit will help boost your score.

All in all, it’s possible, but unlikely, to get an 850 credit score. Whether you want to try for one is entirely up to you.

Now that we’ve discussed ways to raise your credit score, are you curious about how much your mortgage payment? If so, check out our mortgage calculator. However, if you have more questions about the role credit plays in buying a home, our experienced mortgage professionals can help you.

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