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5 Proven Strategies to Elevate Your FICO Score

Understanding Your Credit Score Composition Your FICO score reflects your financial habits, broken down into five key components:

  • Payment History (35%): Timeliness of your payments.
  • Amounts Owed (30%): Your credit utilization rate.
  • Length of Credit History (15%): Age of your accounts.
  • Credit Mix (10%): Variety of credit types.
  • New Credit Inquiries (10%): Frequency of credit checks.

1. Dispute Inaccuracies on Small Collections With the FICO 9 model disregarding small collection accounts under $100, disputing any minor inaccuracies can potentially improve your score. Collection agencies may not respond to disputes for older accounts nearing the seven-year drop-off mark1.

2. Maintain Impeccable Payment History Your payment history is the most significant factor in your credit score. Ensure all bills, including credit cards, loans, and even utility bills, are paid on time. Late payments can significantly impact your score, signaling higher risk to lenders2.

3. Adhere to the “30% Rule” Keep credit card balances below 30% of your limits. Lower utilization rates are associated with higher credit scores, with the most creditworthy individuals averaging around 7% utilization3.

4. Preserve Old Credit Accounts Avoid closing old credit accounts as it can increase your credit utilization ratio and shorten your credit history. Instead, keep these accounts open to maintain a healthy credit mix and length of credit history4.

5. Consolidate Credit Card Debt with a Personal Loan Consider using a personal loan to pay off credit card balances. This strategy can lower your credit utilization and shift your debt to an installment loan, which has a less direct impact on your credit score. However, ensure timely repayments to avoid negative effects5.

Patience and Consistency  Improving your credit score is a marathon, not a sprint. Regularly employing these strategies can lead to gradual improvements. Remember, even small positive changes can compound over time to enhance your creditworthiness.