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How Can I Improve My Credit Score?

Why have a good credit score. Financial experts agree that having a good FICO credit score can grant you access to the best loan and interest rates, rebates, and premium credit cards. Not only can most Americans improve their credit scores, they should actively take steps to improve them.

Here are the score ranges, as currently standardized in the credit industry:

  • 300-550, poor credit
  • 550-620, sub-prime
  • 628-680, acceptable credit
  • 680-740, good credit
  • 740-850, excellent credit

Why Improve Your Score?

FICO scores are based on your projected ability to repay debt. They're based on your payment history, the types of credit you used, the amounts you owed, the length of credit history, and any new credit you undertake. Bankruptcy and foreclosures can drop your score by 100 points or more.

The Wall Street Journal reports that due to poor credit, you might find yourself paying interest on a car loan that increases the total cost by 25 percent. Consider this: a poor score may weigh negatively on future employment, applications for rental housing, and on mortgage rates. According to having "good credit" over "sub-prime credit" can make a difference of more than 11 points on an auto loan and cut mortgage interest rates in half.


are solid, proven methods for improving your score, but few will work if you don't have sufficient funds to live on and pay down existing debt. Once your finances stabilize, you'll need to use credit to improve your credit. That doesn't mean carrying a huge balance. On the contrary, using credit to buy works best if you retire your balances regularly. Your credit will rise without your having to pay excessive interest rates. Credit restoration takes time, so don't expect overnight results if you have serious black marks on your history.

Key Steps to Rebuild Your Credit History

1. Pay Your Bills

Late payments can affect about 35 percent of your total score. So the most important thing you can do is pay your bills on time every month. If you have trouble doing this, look into automatic payments from your checking account or using electronica bill-paying services from your bank.

2. Reduce Your Debt

How much you owe determines 30 percent of your credit score. Start by paying off your oldest debt and dedicate yourself to paying off affordable bills as soon as they arrive. Pay the accounts with the highest interest rates first. If you cannot pay down your debt, seek credit counseling to come up with a payment plan, including consolidation or installment loans.

Category: Credit

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