How I Raised My Credit Score 150+ Points

I will never forget the first time I pulled my credit score.  I was in my early twenties sitting around with college friends.  One friend just received a letter regarding a medical bill in collections that he didn’t realize existed.  So he decided to pull his credit report and credit score to see where he stood.

I thought to myself, I’ve never pulled my credit report before. I followed my friends lead and pulled my credit score too.  I figured it had to be good.  I mean, I paid my bills on time (for the most part).  I only had one $800 credit card from college.

Boy, was I in for the shock of my life!

Staring patiently at the screen, it finally came up.  My credit score was a 580!  580!  No, that had to be wrong.  I was mortified.  I thought I was responsible.  I thought my credit score would reflect that.

My credit score was only part of the story.  Therefore, I took the following steps to raise my credit score.

raise my credit score

Pulled Credit Report

It turned out there was a medical bill for a few hundred dollars showing in collections.  I didn’t even know about it.  I immediately called the collections company to negotiate the bill.  They said I could settle the account for a lower amount but it would still appear on my credit report;  however, if I paid the item in full, they would remove it.  During the next pay period, I paid the bill in full.

Related: The Only Way to Get your Free Credit Report!

Paid Down Debt

Remember that one $800 credit card that I mentioned earlier?  Well, I failed to mention that every month it had an outstanding balance of at least $700.

Your credit score takes into account your credit utilization ratio – or how much debt you have compared to your credit limit.  Therefore, I was using over 80% of my available debt.  To creditors, it appeared that I was overextended.  My next step was to pay down my credit card balance.  I needed to get the outstanding balance down to at least $250.

Related: How this Teacher Paid off $39,000 of Debt in 21 months

Paid Bills on Time

Using most of the balance wasn’t the whole story on that $800 credit card account.  In addition, the monthly payment was paid late on multiple occasions.  Besides the fact that each late payment resulted in an ugly late fee, it was also being reported to the credit bureaus as a late payment.

Payment history accounts for 35% of your credit score.  Therefore, those few late payments had a large impact on my score.  From that moment on, I was determined to not make a late payment.

Increase Available Credit

This last step in the journey to raise my credit score took time.  I went to the credit card company and asked for a credit limit increase.  At first, I was denied the increase, but after asking a year later my credit limited doubled to $1600.

Credit limit increases are often frowned upon in the personal finance sphere but I love credit limit increases!  Why you may ask?  The more available credit you have makes your credit utilization ratio lower.  Therefore, if I still had the $250 on that credit card and the credit limit is now $1600, my credit utilization ratio would be 15%.  The important thing to keep in mind is just because you have the higher credit limit, does not mean you have to spend the additional money.

Time

Ultimately, it took time to raise my credit score.  Since initially checking my credit report and credit score, I check those items every few months.  After checking my credit score earlier this week it was well in the 700’s.

At the end of the day, back then I didn’t understand my credit report or credit score.  Check out this detailed post about credit report basics so you can understand what information is used to calculate your credit score.  It took me years to raise my credit score but it doesn’t have to take you that long.  There are many other techniques to improve your credit score.  Are you interested in a free consultation of your finances?

There are many other techniques to improve your credit score.  Are you interested in a free consultation of your finances?  Click here for a free 15-minute consultation.

 

 I was shocked when I first looked at my credit score and it wasn't even 600 points. Learn the techniques I used to raise my credit score 150 points so you can do it too!

When is the last time you checked your credit score?  What actions have you taken in the past or are you currently taking to raise your score?

 

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Interested in buying your first house? Or a new car? Check out how I raised my credit score 150+ points and how you can do the same.

59 comments

  1. I think your story is a fairly common one. Most people simply don’t know what goes into their credit score. Once you realize the key factors – like credit utilization ratio – it becomes much easier to raise your score. I’m sure yours will keep going up!

  2. I’m in Canada and I don’t check my credit score as often as I could because there are usually fees associated with it. I last checked in late 2012. I know really bad! Having a good credit score is important to me but since I already have a house I don’t really fuss about it too much. These are really great tips to improve your credit score but in Canada I believe that if you carry a minimum balance you will have a higher credit score than someone who pays it off in full – not that I would recommend that strategy.

    1. Very interesting Sarah! I never realized that credit scores were different in Canada but it does make sense. I have a house too; but unfortunately was the victim of id theft in the past, so I def think it is important to check your credit score/report regularly.

  3. I don’t think I ever checked my score when I was young. This is a good lesson for all of us and it also provides practical information that can be helpful to all of us. Thanks for sharing.

    1. I agree with you Robbi! I didn’t even think to check my credit score in college or prior. I figured it had to be good. Unfortunately, I learned the hard way.

  4. These are great tips. I haven’t checked my credit score in awhile and I know that I need to. I guess I’m avoiding it on purpose. Lol. Will check it soon though. Thx for the reminder to make it a priority.

  5. Great tips. Sometimes people don’t like to check because they’re scared of what they’d find, which is dangerous. I check my score monthly for any changes. I’m working on getting it back to prime.

    1. I agree! Some people are scared of the outcome but it is great to know in advance so you can get to work improving it.

    1. At least you know where you stand with your credit score. It is better to know now than when you are trying to purchase a car or qualify for a mortgage. Now you can work towards improving the score. 🙂

  6. These are great tips! People don’t realize how important it is to check your credit score. We have a credit monitoring tool with our bank so we check out credit reports monthly. There have been times I had to reach out and get things removed that should be on there.

    1. Having a credit monitoring tool is awesome! It is crazy how much incorrect information can end up on your credit report. Def a reason why it is important to check it often.

    1. I agree with you on that one. I tend to use credit cards now mainly for points which in turn help to find vacations. 🙂

  7. Great advice! I find it sad that they don’t teach these kind of topics in high school. College students should be educated about the good and bad of student loans, credit, etc. Most people are responsible but don’t understand how it all works at a young age. I see the world so much clearer now in my 30’s than back then.

    1. I agree that they should teach these topics in high school and college. Its unfortunate that many of us don’t learn until we need the credit later in life.

  8. Great post on credit scores. I did a post about a month ago and got some good traffic. Not sure it was my good story telling abilities or the altar of FICO that was responsible. I also started my credit journey in the 500’s, 520 to be exact. Now I’m in the upper 700’s and I owe it all to becoming a student of my aspirations. If you seek to be wealthy, study wealth.

  9. Tia,
    Thank you for sharing your insights. No matter where a person is within their financial journey – your points are timely, relevant & easily implemented.

  10. These are great tips. I believe that you are correct in all your points. I particularly agree with ‘time’. Increase your credit score doesn’t happen overnight. I know that when I was starting out and got my first credit card, it took me at most 6 monthish to see my credit score increase even when I was paying my debt on time, leaving zero balance, etc.

    1. Great reminder Allan, that improving your credit doesn’t happen over night. It is definitely something you have to want and to be patient about.

  11. Congrats on your score! I started building mine in college. After recently purchasing a car I’m so glad I did. I was able to get an extremely low interest rate.

  12. Great tips. I’ve found people tend to not think about their credit score until they need it to get a loan or make a purchase. Making sure you have a low debt ratio is key. Congrats on your success.

    1. You are so right Leah! So many people wait until they are unable to get a loan to worry about their credit score. It is so important to get ahead of that though.

  13. It’s only been about a month since I checked my credit score. I have some things I have to clear up (I remember when my score was about 700 – seems like generations ago!). I’m going to use your ideas to make a list of things I need to do to get my credit score back up. Then I’ll have an action plan and won’t keep floundering around wondering what I should do next.

  14. Great advice – I ask for credit line increases every 6 months or so. I keep my expenses on the card the same but decrease my credit utilization ratio to help bump up my score. When you do this regularly across a few different cards it really makes a difference!

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