How to Raise Your Credit Score 70 Points

A strong credit score opens doors to favorable lending terms and a wider array of financial products. Raising your score by 70 points is an attainable goal through focused effort. While individual results can vary based on your current credit standing, understanding and applying key strategies can lead to substantial positive changes. This guide outlines steps to enhance your credit score.

Understanding Credit Score Components

Credit scores distill your financial behavior into a three-digit number, primarily used by lenders to assess risk. Most scoring models, like FICO, consider five main categories to determine your score. Each category carries a different weight, influencing the overall calculation.

Payment history is the largest influence, accounting for approximately 35% of your FICO Score. It evaluates consistent on-time payments across all your credit accounts, including credit cards, loans, and mortgages. Even a single late payment, especially if 30 days or more past due, can significantly impact this component.

The amount owed, or credit utilization, is a substantial factor, making up about 30% of your score. This refers to the proportion of your available revolving credit that you are currently using. Maintaining low balances relative to your credit limits demonstrates responsible credit management.

The length of your credit history contributes around 15% to your score. This considers how long your credit accounts have been open, including the age of your oldest and newest accounts, and the average age of all your accounts. A longer history of responsible credit use indicates lower risk to lenders.

New credit accounts for approximately 10% of your score. This category looks at how many new credit accounts you have recently opened and the number of recent inquiries on your credit report. Opening multiple new accounts in a short period can signal increased risk and may temporarily lower your score.

Finally, your credit mix makes up the remaining 10% of your score. This assesses the diversity of your credit accounts, such as a combination of revolving credit (like credit cards) and installment loans (like car loans or mortgages). Demonstrating the ability to manage different types of credit responsibly can positively influence your score.

Optimizing Existing Credit Accounts

Improving your credit score often begins with managing existing credit accounts. Consistent, responsible behavior can lead to significant score improvements. This involves diligent payment practices and strategic balance management.

Making all payments on time is crucial, as payment history is the most influential factor. Setting up automatic payments can ensure minimum payments are met by the due date, preventing late fees and negative marks. Regularly checking your account statements and setting personal reminders can also help you stay organized and avoid missing payment deadlines.

Reducing your credit utilization is a powerful strategy due to its substantial impact. This involves lowering the percentage of your available credit that you are currently using. Aim to keep your credit utilization ratio below 30% across all revolving accounts, ideally closer to 10% for optimal results. To achieve this, consider making multiple payments throughout your billing cycle rather than just one large payment at the end. Paying down balances before your statement closing date can also help report lower utilization to the credit bureaus.

When paying down debt, two common strategies are the debt snowball and debt avalanche methods. The debt snowball method involves paying off your smallest balance first, then rolling that payment amount into the next smallest debt, providing psychological wins. Conversely, the debt avalanche method prioritizes paying off the debt with the highest interest rate first, which can save you money on interest charges over time. Both methods require consistent extra payments beyond the minimum due to be effective.

Avoid closing old, paid-off credit accounts. Closing an account can negatively impact your credit score by reducing total available credit, which increases your credit utilization ratio. It can also shorten the average age of your credit accounts, affecting the length of your credit history. A closed account remains on your credit report for up to 10 years if in good standing, but its impact on available credit and average age is immediate.

If you face financial hardship, consider negotiating with your creditors. Many credit card companies offer hardship programs that can temporarily reduce interest rates, lower minimum payments, or defer payments for a period, typically six to 12 months. Contacting your issuer and explaining your situation can lead to a more manageable repayment plan. If you have a history of on-time payments, you might also negotiate a lower interest rate by calling, especially if your credit score has improved or you have received competitive offers.

Addressing Credit Report Discrepancies

Ensuring the accuracy of your credit report is important, as errors can unfairly depress your score. Federal law provides you with access to free copies of your credit reports, allowing you to review them for any inaccuracies. You can obtain a free copy from each of the three major nationwide credit bureaus—Experian, Equifax, and TransUnion—weekly through AnnualCreditReport.com.

Upon obtaining your reports, review them for incorrect or unfamiliar information. Common discrepancies include:
Incorrect personal information
Accounts that do not belong to you
Duplicate accounts
Incorrect payment statuses (e.g., a payment reported as late when it was on time)
Accounts listed as open that you have already closed

Identifying these errors is essential because they directly influence your credit score.

If you discover an error, you have the right to dispute it with both the credit bureau and the information provider. To initiate a dispute with a credit bureau, you can do so online, by mail, or by phone. Provide clear details and supporting documentation, such as payment records or account statements. The credit bureau must investigate your dispute, usually within 30 days, and remove or correct inaccurate information. If confirmed incorrect, they must notify the information provider to correct their records.

Strategically Expanding Your Credit Profile

For individuals with limited credit history or those diversifying accounts, adding new credit can be beneficial. These methods allow you to build a positive payment history and demonstrate responsible credit management over time.

Secured credit cards offer an accessible way to establish or rebuild credit, especially with a low or no credit history. These cards require a cash deposit, typically ranging from $200 to $500, which serves as your credit limit. This deposit minimizes issuer risk, making them easier to qualify for. Using a secured card responsibly, with on-time payments and low utilization, builds positive payment history, typically reported to the three major credit bureaus.

Credit builder loans are another effective tool for establishing credit history while also saving money. Unlike traditional loans where you receive funds upfront, with a credit builder loan, the lender places the loan amount, usually $300 to $1,000, into a locked savings account or Certificate of Deposit (CD). You then make regular monthly payments on the loan over a set term, typically six to 24 months. As payments are made, the lender reports on-time activity to the credit bureaus. Once repaid, you gain access to the funds.

Becoming an authorized user on someone else’s credit card can help build credit, if the primary account holder manages their account responsibly. As an authorized user, the account’s payment history and credit limit may appear on your credit report. This can positively impact your credit length and utilization, especially with a long history of on-time payments and low balances. However, ensure the issuer reports authorized user activity and the primary cardholder maintains excellent credit habits, as their negative actions could also reflect on your report.

When considering new credit applications, exercise caution. Each application typically results in a “hard inquiry” on your credit report, which can temporarily lower your score by a few points. While the impact is minor and temporary, multiple inquiries in a short period can signal higher risk. Apply for new credit only when genuinely needed, spacing out applications to minimize the cumulative effect on your score.