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Boost Your Credit Score to Become a Better Borrower

Written by Diane Moogalian on October 21, 2013 in Credit  |   18 comments

In general, the higher your credit score, the more likely it appears to a lender that you will pay your bills on time. You can boost your score by avoiding negative behaviors and swapping them for more positive, creditworthy habits.

credit scoreYou have a number of different credit scores, including your FICO scores and your credit scores from Equifax, Experian, and TransUnion, among others. Each credit score is calculated using a slightly different scoring model, and each model might consider different factors or assign different weight to the same factors.

Despite the different ways they are calculated, your credit scores have two things in common: They are each expressed as a three-digit number, and lenders use them to predict your risk as a borrower. In general, the higher the credit score, the more likely it seems to a lender that you will pay back your debt on time.

Lenders decide which credit score model to use based on the system that best fits their needs—an auto lender, for example, might use a different credit scoring model than a mortgage lender. While some lenders use industry-weighted scores, others use blended scores from all three of the national credit reporting agencies.

Because there isn’t a universal score cutoff used by all lenders, it’s difficult to say what credit score you’ll need in a particular lending situation in order to qualify for the best terms and the lowest interest rate.

How low can my credit score go?

The credit score range—and how low your score can go—will differ slightly depending on the model being used.

Your Equifax credit score will fall within the numerical range of 280 to 850, where higher scores indicate lower credit risk.

Other credit score models may use different score ranges. Experian’s score range, for example, is between 330 and 830, while TransUnion’s credit score range is between 300 and 850.

The FICO Score, the credit score most commonly used by lenders, ranges from 300 to 850. Each consumer has a FICO credit score from each of the three national credit reporting agencies.

What can lower my score?

Your credit score is calculated based on information in your credit report, such as your payment history, the amounts you owe on your credit cards and loans, the types of credit you are using, your recent credit activity, and the length of your credit history.

It’s difficult to say how certain actions will impact your credit score because each person’s credit history is different. In general, though, the most common negative score factors include:

  • Serious delinquencies, recent delinquencies, or too many delinquent accounts
  • A short credit history
  • Too many accounts with balances
  • A high ratio of balances to credit limits on revolving accounts
  • Accounts in collections

Even if you have one or more of these items in your credit file, however, your credit score will not necessarily plummet to the lowest possible score.

Become a better borrower by positively affecting your credit score

If you’ve found yourself on the lower end of the credit score spectrum, try to assess which financial behaviors are hurting your creditworthiness. Do you have delinquent accounts or collections in your credit file? Do you regularly miss credit card payments? Factors like these can negatively impact your score.

Because delinquent payments and collections can have a considerable negative impact on your credit score, make sure you pay your bills on time. If you have missed payments, work on paying off your debt and keeping your credit card balances low.

Opening new accounts and paying them off on time may help to improve your credit score in the long term, but you still should only open new credit accounts as needed. If you have a short credit history, it’s even more important to avoid opening multiple new accounts at the same time. Adding new accounts can lower your average account age, which could reflect negatively on your credit score, especially if you’ve only recently started building your credit history.

If you currently have a low credit score, you won’t be able to significantly improve it overnight. But if you consistently engage in creditworthy behavior, you could see your credit score get better over time.

Diane Moogalian is vice president of operations for Equifax Personal Solutions with responsibility for operational strategy and execution in support of customer care and fulfillment of credit and identity-related products for consumers. Prior to joining Equifax in 2007, Diane held several strategic roles with leading financial services companies. Diane graduated from the University of Richmond with a bachelor of science degree in business administration (marketing and economics) and earned a certificate in international business from Virginia Commonwealth University.

18 comments

  1. Cecelia Jacobs says:

    I am a lender and I notice that on some tradelines it doesn’t have the monthly “1”s on some of the tradelines. I was told that the grid being filled out make a difference is that true?

  2. J.D. says:

    Not necessarily. Depending on the creditor and type of account, not all lending institutions report monthly so the monthly “1”s on the report aren’t actually calculated. The overall rating as well as any late payments on an account is usually what’s considered. Although to be completely accurate, if there is ever an account like that reporting no monthly payment when you know you’ve made one, you can always file a dispute and ask the creditor to fix it.

  3. M.E.S. says:

    I am a graduate student and have about $20,000 of debt from undergrad and $10,000 thus far from graduate school. I haven’t checked my credit score, but I was recently denied for a Kohl’s credit card. I don’t own–and have never owned–any credit cards, so my only debt is from student loans. I don’t have a lot of money to start paying on the interest or principle of my loans, but I’d like to start trying to pay something–but I don’t know if it will actually help my credit score. Do student loans affect credit scores in the same way that credit cards do? Will attempting to pay something on my loans help my credit score? I want to start building my credit, but I’m afraid my score is too low to get approved for a credit card at this point.

    • EFX Moderator, KB says:

      M.E.S. good question. A student loan can be considered good debt as long as you are able to pay it back on time each month, making at least the minimum payment.Your payment history is the largest factor that influences your credit score, accounting for about 35 percent of your score. As a result, consistently keeping up with your payments can help you raise your credit score over time. Here is a link with more information: http://blog.equifax.com/credit/your-credit-score-good-debt-vs-bad-debt/

    • Edward Munoz says:

      I was reading your question and I thought you might want to consider checking out the National Guard. I know it doesn’t answer question, but you could have all your loans paid off in six years with the Student Loan Repayment Program (SLRP). They pay up to 50.000 and your only commitment is one weekend a month and two weeks in the summer.

  4. Josh Lambert says:

    Credit reports are a complete crock of s@$€£!!! Nobody can give a definitive answer how your credit score is even calculated. Not even the credit reporting agencies. Not one single answer is the same. I’m sorry but 2+2=4. That’s just how it is. Yet ask a credit reporting company, lender, borrower and nobody can give you an answer. Nobody even understands how a FICO score or credit number is even determined.

    This article is the same rhetoric that proves my point. “Boost your credit score to become a better borrower”. Anybody learn a definitive answer as how to do this? The last paragraph sums it up like all credit advice.

    “If you currently have a low credit score, you won’t be able to significantly improve it overnight. But if you consistently engage in creditworthy behavior, you could see your credit score get better over time.”

    Yet companies can file inaccurate or bogus negative payments against you and getting them removed is almost impossible. Your credit score is immediately hit negatively yet removing those inaccuracies won’t increase your numbers. Go figure.

  5. M.P.S. says:

    I have a charge off on my credit profile. I fell behind because the charges had to be paid in full by the end of the month. I’ve been paying what I can each month. I owe a total of 21,000. How can I turn that negative into a positive. The account is approximately 8 years old.

    • EFX Moderator, KB says:

      M.P.S. that’s a good question. In order to get your credit accounts under control and to improve your creditworthiness, consider minimizing the amount of new debt you take on while you work on paying off the debt you currently have. By paying down your debt gradually over time, you may positively impact your credit score.

      In addition, responsibly using the credit you’ve already been extended and applying for new credit only when necessary can help you show lenders that you are a creditworthy consumer. Click this link for more information: http://blog.equifax.com/credit/your-credit-score-good-debt-vs-bad-debt/

  6. Don says:

    Diane… I have a loan through a bank here in Georgia. They only report to Equifax, I’ve contacted experian and transunion and they still have not updated their files. Doesn’t seem like there’s much more than I do. Is it really that important for all 3 to have the same information?

  7. Priss says:

    I have no negative debt, pay my bills…yet my credit score keeps creeping downward. I have a high dollar limit credit card that I use and pay off every month. The only other debt I have is my mortgage. Why is my score going down?

  8. Anonymous says:

    Basically, how long does it take to improve your credit?

    • EFX Moderator, KB says:

      You can’t improve your credit history and credit score overnight, but if you create a budget to pay down your debt—and you stick to it—your bad debt may start to look like good debt.

  9. PPR says:

    In forty years I have never had a late or unpaid bill on my mortgage or credit cards. I normally pay off debt in full before it is due and sometimes transfer it to a limited time interest free account and pay with no interest, however, opening a new account has been held against me as someone looking for extra credit to cover bad debt rather than a prudent method of saving money. I have sometimes had disputes with companies, especially cable, internet and phone services but have been able to provide documentation to have negative items removed.
    I have been in dispute for almost two years with one such case who has reported me to collections because “it (their computer) says I never returned their equipment. I have been able to successfully disprove other charges regarding date of disconnection and their quality /availability of service. I was ill and bedbound when the equipment was returned by another person for me, so I do not have a shipping receipt. I have documented these facts and even written to the VP of Consumer Affairs of the company, which is notorious for this type of bad practice.
    This one inaccurate report has dropped my credit score by about 130 points. How can this one incident, even of it were true, which it is not, have such a huge impact based on my long excellent history. Why is it always the consumer’s responsibility to disprove the lender’s claims? What else can I do?

  10. JD says:

    When you pay your credit card bills, don’t use them again until after they have reported to the Exper, Equ. & TU. Usually that it is about 5 to 6 days later. When you pay it off and begin using it right away, the new balance (the new charges) is reported.

  11. D Jeff says:

    I agree with some of the posted complaints. Why would there be different scores from each company when they ALL should be on the same page. I honestly don’t trust any of the 3 agencies. My reports have shown different accounts on their reports, WHY. When I applied for credit one of my reports said I had a score of 0. What ???. checking my credit scores don’t know where in the world 0 came from. So this proves something is terrible wrong with the reporting agencies.

  12. sofia says:

    What is the FICO score based on??? where can it be found I want to refinance my home what score does the lending agency use

  13. john p says:

    I was told I need 30 points to be able to purchase a home , does anybody know how long that will take


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