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How to Boost Your Credit Score

What you may not know about loans, money and credit

A good credit report and credit score influence your ability to get a loan, qualify for a home mortgage, and, even, land a job. Your credit score plays a crucial role in determining your financial health. Have you ever asked yourself: “How can I improve my credit score?” or “How can I get a better interest rate on my mortgage?” If you have, then read on. With the right strategies and discipline, you can learn how to boost your score and pave the way to a much more comfortable financial future.

two women smiling as they learn about boosting their credit score

What is a good credit score?

A credit score of 700 or higher is considered good or desirable by lenders, according to the credit bureau Experian. Above 800 is excellent. For most Americans, the norm falls between 600 and 750 but in 2022, during the pandemic, the average FICO® Score – a model used by 90% of lenders to determine if a borrower is likely to repay a loan – fell to 714. Credit scores are now once again on the rise. If your score is below 700, you may still qualify for a home mortgage and some credit cards. More on that to come.

How are credit scores calculated?

It is essential to understand what a credit score is and how it's calculated so that you don’t accidentally lower yours by making, what may seem like, very reasonable and sensible financial decisions. Your credit score is determined by the following:

1.         Payment History: This accounts for the largest portion of your score and reflects whether you've made timely payments on your credit accounts.


2.         Credit-to-Debt Ratio: This is the ratio of your credit card balances to your credit limits. To calculate your credit-to-debt ratio, also known as credit-utilization ratio, add up the credit limits of all of your credit cards and your credit card balances. Divide your total credit limit, or the total credit that is available to you, by the amount of debt on all of your accounts. That is your credit-to-debt ratio. The lower the better, but under 30% is the target.


3.         Length of Credit History: The longer your credit history, the better. It shows lenders that you have experience managing credit over time.


4.         Types of Credit: Having a mix of credit accounts, such as credit cards and installment loans, such as car loans and student loans or mortgages, can positively impact your credit score.


5.         New Credit Inquiries: Opening multiple new credit accounts within a brief period can temporarily lower your score as it may indicate financial distress.


Where can I find out my credit score for free? And can I monitor my credit report for free?

Yes and yes! Every 12 months, by law, you can get a free credit report from each of the three credit bureaus – Experian, Equifax and TransUnion. Request your free credit reports online, by phone, or by mail. Only is authorized to fill orders for the free annual credit reports that you are entitled o by law. You will get a free report from, but not your credit score. There are other options for getting your credit score and credit monitoring for free.

Ask your bank or credit card companies if they offer free credit-monitoring services to their customers. Some will notify you if there are changes to your credit report, if new accounts are opened in your name or if significant changes to your credit score occur.

Credit Karma offers free access to your credit scores and reports from Equifax and TransUnion only, as well as credit-monitoring services, including alerts about the opening of new accounts, credit inquiries, and potential identity theft. Signing up for Credit Karma is quick and easy, making it a convenient option. Some of its services are free and some are paid. Credit Sesame offers similar services.

By law, you are also legally entitled to a free credit report from when the following happen:

  • You’re denied credit, employment, insurance, or experience a negative ramification from information in your credit report. You must ask for your report within 60 days of being notified of such an incident

  • You’re out of work and plan to look for a job within 60 days

  • You’re getting public assistance

  • Your credit report is inaccurate because of identity theft or other fraud

  • You have fraud alert on your credit file


How can I improve my credit score?

Great question!!! Let's explore some ways to boost your credit score:

Check your credit report regularly

Remember Get your Equifax, Experian, and TransUnion reports and review them carefully for inaccuracies, including credit information and personal history, as well as fraudulent activity. Report any errors.

two women looking at a computer screen talking

Make timely payments

Your payment history is the most significant factor influencing your credit score, so it's crucial to pay your bills on time, every time. Set up automatic payments or reminders to ensure you never miss a due date. Even one overdue payment can have a significant negative impact on your score. Missing a mortgage payment is considered a major credit-score killer. Avoid that at all costs.

Reduce credit card balances

Keeping your credit-to-debt ratio low demonstrates responsible credit management to banks and other lenders. Aim for under 30%. If possible, pay down your credit card balances aggressively to lower your ratio and to save money on interest payments.

Maintain one credit card with a zero balance

If you’ve worked hard to pay off a credit card and now have a zero balance, congrats. Don’t close that account because, if you do, you will likely see your credit score drop. You’ve just increased your credit-to-debt ratio. Yes, you lowered your debt but you’ve also lowered your total access to credit– making you seem more cash strapped to lenders. Instead, put the card away and don’t use it. Better yet, cut up the card so you aren’t tempted. Also, the length of your credit history matters. Older accounts show longevity. Keeping these accounts open can improve your score for several reasons.

Avoid opening too many new accounts

While it's essential to have a diverse credit mix, opening multiple new credit accounts within a short period can signal financial instability to lenders. Don’t open new credit cards just before you apply for a mortgage or other installment loan. In fact, don’t apply for more credit or make any major purchases until you have the keys to your new home or car in your hand. Even after being approved, the bank can reverse their decision to loan you money – up until the moment your loan closes. This has happened to some very shocked and disappointed homebuyers.

If you're new to credit or have a limited credit history, consider alternative credit-building tools, such as secured credit cards or credit-builder loans. This form of credit can help establish or rebuild your history. You may also benefit from being added as an authorized user to an existing account (a parent or spouse’s credit card). Then, as your family member builds credit (by using that credit card and paying it off) so do you. Credit cards, when used strategically, can help you become more attractive to lenders, earn points, and get free stuff. Knowing how to pick the right credit card is key.

Improving your credit score is a gradual process that requires patience and persistence. Stay disciplined with your credit habits, and over time, you'll see your credit score improve.


What credit score do I need to buy a house?

While different types of loans may have varying criteria, there are general thresholds that can help you gauge where you stand in the qualifying process.

Conventional Loans: These are loans not insured or guaranteed by the government. A credit score of at least 620 is typically required to qualify. Banks often offer more favorable interest rates and terms to lenders with a score of 740 or higher. Buying a Habitat home requires a minimum credit score of 620.

FHA Loans: Backed by the Federal Housing Administration, FHA loans are popular among first-time homebuyers due to their more lenient credit requirements. While FHA lenders may consider borrowers with credit scores as low as 500, a score of 580 or higher is usually needed to qualify for the minimum down payment of 3.5%. If your score is between 500 and 579, you may still qualify but will need to make a down payment of at least 10%.

VA Loans: These loans offer competitive terms to eligible veterans, active-duty service members, and certain surviving spouses. They often do not require a minimum credit score, but most lenders prefer borrowers with a score of at least 620 to qualify for a VA loan.

USDA Loans: Designed to assist low- to moderate-income homebuyers in rural areas, USDA loans also have flexible credit requirements. While there is no official minimum credit score, most lenders look for scores of 640 or higher.

If I have a  good credit score, is that enough to get a home mortgage?

While your credit score and credit history are crucial factors, mortgage lenders also consider your income, employment history, debt-to-income ratio, and down payment amount. So while a high credit score and strong credit history is not all you need, that can compensate for weaknesses in other areas. If you have a lower score, however, you may be required to show more qualifications in other areas.

How can I correct an error on my credit report?

Mistakes on credit reports are most commonly found in personal information (Look for misspellings, wrong addresses and outdated information), account details (Check for accounts that don't belong to you, duplicate accounts and incorrect balances) and fraudulent activity, including unauthorized accounts and inquiries resulting from identity theft.

Report inaccuracies immediately to the credit bureau listing the error. All three – Experian, Equifax, and TransUnion – provide the ability to do this on their websites, via phone or mail. Be prepared by compiling support information to prove your case, such as billing statements, account statements or correspondence with creditors. Credit bureaus have 30 days to investigate and respond to your dispute, but stay on it – following up regularly to ensure your dispute is being reviewed.

If the error involves a specific creditor or lender, it may be simpler to notify them directly. They are required to investigate the dispute and report their findings back to the credit bureau.

When the investigation is complete, review the findings of the credit bureau, and request a free copy of your updated credit report to verify changes have been made.

You have the option to add a consumer statement to your credit report if the error is not corrected despite your efforts. The statement allows you to explain your side of the story and provide context for future creditors.

How can I protect myself against identify theft? Should I put a lock on my credit?

You can put a lock, also called a freeze, on your credit report. It will restrict access to the report and make it more difficult for identity thieves to open new accounts in your name. So, if you suspect identify theft, locking your credit report is a good safeguard.

Here's how it works:

Initiate a freeze by contacting each of the three major credit bureaus individually. You can usually do this online, by phone, or by mail. Each bureau will provide you with a unique PIN or password that you'll need to manage the freeze.

Once it is in place, lenders and creditors will not be able to access your credit report unless you temporarily lift or "thaw" the freeze. You can do this using the PIN or password provided by the credit bureau. You can lift the freeze temporarily when you need to apply for credit, then re-freeze it afterward.

It is free to start, lift, and remove a credit freeze. But fees may apply in some states for certain related actions, so check with each credit bureau for details.

A credit lock doesn't prevent all types of identity theft, such as unauthorized charges on existing accounts, so it’s essential to continue monitoring your accounts for any suspicious activity.

Is it worth it to pay for credit monitoring?

Here are some factors to consider when deciding whether to pay for credit monitoring:

Level of Concern about Identity Theft: If you're particularly concerned about identity theft or unauthorized access to your credit information, a credit monitoring service can provide peace of mind by alerting you to any suspicious activity on your credit report.

Convenience and Accessibility: Paid credit monitoring services often offer additional features and benefits, such as access to credit scores from multiple bureaus, identity theft insurance, and more frequent monitoring. A paid service may be worth it if you value these added conveniences.

Financial Situation: Consider your budget and whether paying for credit monitoring fits into your overall financial plan. While some services offer relatively low monthly fees, the cost can add up over time. Evaluate whether the benefits you receive from a paid service justify the expense.

Your Commitment to Self-Monitoring: If you know that you won’t have the time or motivation to continually monitor your own credit, then paying for that convenience may be well worth it. The cost of identity theft or uncorrected errors can be high.

Do I have legal rights that protect me against unfair or inaccurate credit reporting

The Fair Credit Reporting Act (FCRA) gives you certain rights to protect your credit report, including:

·       The right to dispute inaccuracies on your credit report

·       The right to a free credit report every 12 months from each of the three major credit bureau

·       The right to seek damages from creditors or credit bureaus that violate your rights under the FCRA

Remember, your credit report is a powerful tool – make sure it works for you, not against you.

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