Want to Improve Your Credit Score? Here’s What Really Impacts It (and What Doesn’t)

Knowing where your credit score falls within the range of “meh” to “magnificent” and how you’re being evaluated will help you pinpoint where to focus your efforts and take effective steps to raise it.

All of the strategies below target the factors with the biggest influence on how credit scores are calculated. Some are designed to pretty-up your debt levels. Others will help show off the experience you’ve amassed handling loans.

Which ones will have the biggest impact on your credit score depends on your individual circumstances. That’s why it’s important to start with the source of information that feeds into calculating your credit score: Your credit records.

Start by clearing up any falsehoods clouding your credit reputation

Reviewing your credit reports for errors may seem like a tedious bit of housekeeping. But it’ll be time well spent if you spot any mistakes (which are surprisingly common!).

Correcting inaccuracies ensures that your credit score isn’t being dragged down by incorrect info.

You can pull your credit reports – for free! – either directly from the three major reporting bureaus (Equifax^®, Experian^®, and TransUnion^®) or all at once at AnnualCreditReport.com.

Don’t be surprised if you uncover inaccurate information. A Consumer Reports study found that nearly half of consumers who volunteered to check their credit reports found errors, and more than a quarter of those mistakes were serious enough to damage their credit scores.

Keep an eye out for things like:

• Payments wrongly reported as missed or late
• Debts that don’t belong to you being reported as being in collections
• Paid-off debts listed as still outstanding

The dispute and resolution process can take time to play out and be reflected in your credit score. So if you spot any issues, address errors as soon as possible.

How this tactic can help your credit score: Your credit score is based on information lenders, banks and other financial institutions provide to credit reporting bureaus about doing business with you. Removing boo-boos from in your file and setting the record straight ensures that your score accurately reflects your financial behavior.

Never miss a bill payment again

We get it. Life gets hectic and sometimes it’s necessary to, say, put off cleaning the bathtub or postpone dinner with friends. But when it comes to your credit score, there’s one essential time-sensitive to-do you should never blow off: Paying your bills on time.

Your debt payment history is the single most important credit scoring factor. More than one third of your score (35%) is based on your record of on-time, late and missed payments.

If you’ve got any late payments in your past, that’s okay! Acknowledge that, yeah, that happened, and vow to be a bill-paying goody two-shoes from here on out. Although past late and missed payments remain on your credit record for a while, the impact of late payments on your score will diminish over time.

Some tips to help you build up a perfect payment record:

• Make it automatic: Alerts and calendar reminders can be helpful tools, but hitting the “snooze” button can inadvertently lead to missed payments. Setting up autopay (automatic payments) removes the friction of having to remember to settle up.
• Send something, even if it’s not enough to pay off your balance: Good for you if your aim is to pay your bill in full! But if that means waiting for your next paycheck to clear, it’s better to send at least the minimum amount due by the due date. You can send an extra payment later in the month which will lower the amount of interest on your lingering balance.
• Lather, rinse, repeat: Every month that you pay your debts on time helps to fortify your credit score. Continue those good habits and you’ll see a steady rise in your score.

How this tactic can help your credit score: On-time payments show lenders that you’re a responsible credit user. A higher rating in this all-important scoring category translates into a higher likelihood that you’ll pay your debt obligations on time. Plus, paying by the deadline helps you avoid late-payment fees and added interest.

Make it look like you’re spending less than you actually are

Your credit utilization ratio (or credit utilization rate) is second only to your payment history in terms of impact on your credit score. The measurement of how much of your available credit you’re using accounts for 30% of your credit score.

As a general guideline, experts recommend keeping the amounts you owe to 30% or less of your available spending limits. In practical terms, if you have a $1,000 credit limit, you’d want to keep your balance to less than $300. For extra credit (score points), aim even lower, as in a credit utilization rate of 10% or less.

Here are three ways to zhuzh the looks of your credit use:

1. Pay down balances on your most maxed-out cards: Keep in mind that this might not be the card with the highest balance. Identify the card with the highest balance compared to the credit limit. Even if you can’t pay it off in full, aim to lower the balance to 30% or less.
2. Spend sparingly on any card with a low credit limit: With less spending wiggle room, small purchases can snowball quickly and bump up against your credit limit. Keep an eye on your balances throughout the month to keep your credit utilization low.
3. Pay down your balances multiple times a month: Lenders typically report account activity to the credit bureaus once a month around your statement closing date. Paying down your balances before the due date reduces the outstanding amount you owe before it’s officially reported.

How this tactic can help your credit score: Improving your credit utilization rate is one of the few scoring factors you can quickly improve. By proactively managing your debts, you can ensure your card issuer reports lower, more favorable balances to credit bureaus, which in turn reduces your credit utilization ratio.

Put an older or unused credit card back in play

That forgotten card hiding in the deepest folds of your wallet? Don’t be in a rush to clean house and close it. Keeping your oldest credit card open and in active rotation benefits to your credit score in a few ways:

1. It highlights your credit handling experience: Like listing past jobs on your resume, older accounts showcase your record of credit use.
2. It counts towards your credit utilization ratio. An open line of available credit works silently in the background to help boost your overall credit utilization ratio. Closing it can hurt your score by reducing the amount of available credit compared to the amounts you owe.

After you identify a card that’s a keeper (your oldest account with the highest credit limit is a good candidate), it’s time to give your lender fresh news to feed to the credit reporting bureaus!

1. Put a small charge on the card every few months and keep it well below the card’s credit limit so as not to drive up your credit utilization.
2. Pay off the balance in full each month to pad your record of on-time payments.

By the way, a minimal amount of activity on all of your cards will also ensure that your lenders continue to feed updated information to the credit reporting bureaus.

How this tactic can help your credit score: Experience and spending power are two important inputs in your credit score calculation. Older accounts strengthen your credit history and improve utilization, and together they influence nearly half your credit score.

Boost your credit limit, but not your actual spending

There are two parts to the credit utilization equation – how much you spend (your balances) and how much you’re allowed to spend (your line of credit). Another way to nudge the scoring needle in your favor is to increase your borrowing power.

A few ways to do this:

1. Request a credit limit increase from your existing lender: Credit increases sometimes happen automatically, but you can expedite the process by requesting a credit limit increase online or via a quick phone call.
2. Apply for a new credit card: Getting a new credit card is another way to get “extra credit,” but it comes with both benefits and drawbacks.
   • The upside: A new credit card increases your total credit limit, which can positively impact your credit utilization ratio as long as you keep the balance low.
   • The downside: Applying for a new credit card typically results in a “hard inquiry” on your credit report, which could temporarily lower your credit score.

Note: While your spending limit may have increased, it’s important that your actual spending does not. If your aim is to improve your credit score, the primary benefit of a higher credit limit is that it helps lower your credit utilization ratio. Increasing your spending can dull the positive effects on your credit score.

How this tactic can help your credit score: If you’ve maintained a good relationship with your card issuer, requesting a higher spending limit could nab you a 10% to 25% credit limit increase. This single move could have a huge positive impact on your credit score, especially if you have low credit limits to begin with.

Ride someone’s coattails to a higher score

Got any credit score idols in your life? Their stellar reputation could help you improve your own if they’re willing to make you an authorized user on one of their accounts.

When your name is added to an already established account, the primary cardholder’s history of use with that card is added to your credit file and used to calculate your credit score.

In other words, your score benefits simply by having your name being associated with an established line of credit.

Before we continue, let’s pause to highlight a few key bits about this setup buried in the fine print: While being an authorized user gives you legal permission to make purchases on the card, you are not legally responsible for the debts incurred. Also be aware that if the primary accountholder misses payments or runs up a balance, their card activity could hurt both of your credit scores.

For what it’s worth, you don’t actually have to use the card to reap the score benefits. In fact, if your only goal is to raise your credit score, the primary user might be more comfortable adding you if they know you won’t be using the card.

How this tactic can help your credit score: Being added as an authorized user to someone else’s credit account is particularly helpful score-wise if you’re trying to build credit. All of the primary cardholder’s data for that account – age, credit line, payment history – gets factored into your credit score calculation. But even if you have an established credit file, adding the account to the mix can give your score a boost.

There are plenty of factors that affect your credit score, like the ones we’ve already covered. Surprisingly, there some things you might expect to have an impact actually have little to no direct effect.

Carrying a balance on your credit

One of the most pervasive credit scoring myths is that keeping a balance on your credit cards helps your credit score. In fact, the opposite is true: Maintaining an outstanding balance can negatively impact your credit utilization rate. Plus it cancels out one of the primary benefits of using a credit card: An interest-fee grace period on purchases before payment is due.

Paying off your balances and stopping all card use

It might sound counterintuitive, but a 0% credit utilization can actually lower your credit score. When you stop using your credit altogether your card issuer has no payment history to report. Eventually, your lender could close the account due to inactivity, reducing your available credit and exaggerating the impact of any new debts you accrue.

Paying with cash or a debit card

While paying with cash or a debit card demonstrates good financial management (yay, you!), it doesn’t illustrate your ability to handle credit.

Using buy now, pay later (BNPL) programs for purchases

Although BNPL is a type of installment loan, it often doesn’t provide a boost to your credit score like a personal loan does. Many BNPL plans do not report on-time payment activity to the credit bureaus. But they may report late or missed payments, which can hurt your score.

Paying your rent and utilities on time

Most utility companies and landlords don’t report information to the three major credit bureaus. You can, however, use services like Experian Boost^® and Boom to get on-time bill and rent payments added to your credit file. Regardless, you’ll still want to pay those bills on time. Otherwise your account could be sent to a collection agency which will tattle to the credit bureaus.

Getting married

You two lovebirds may have vowed to a life of togetherness, but in the eyes of the credit scoring industry, your scores are distinctly separate.

Getting a raise

Your occupation, job status and even your salary don’t impact your credit score.

Demographic information

The credit scoring algorithm doesn’t factor in personal information such as your age, race, religion, gender, national origin, salary, or even where you live.

Certain flattering (and less-than-flattering) financial information

Your net worth, bank account balances, interest rates on your savings and even investing prowess have no bearing on your credit score. You also don’t have to worry about negative information like past credit denials and bank account overdrafts from impacting your score. Whew, right?

How often you check your own credit

Despite rumors to the contrary, checking your own credit does not impact your score. In fact, it’s a good idea to keep tabs on where you stand. Go ahead, take a peek! Relatedly, prequalification for a loan does not affect your score either.

Improving your credit score hinges on showing off how good you are at managing the money you borrow. Positive results will accumulate over time if you simply focus on nailing the most impactful scoring factors. This holds true whether you’re trying to build credit for the first time, working to repair your credit, or aiming for a perfect credit score. As you monitor your progress, don’t forget to celebrate every small score increase along the way!