In-Depth Guide To Improving Your Credit Score (With Personal Tips & Experiences)

Author: Mary Ambrose, CPA/MBA   

Improving your credit score entails consistent on-time bill payments, built-up of available credit line over time, and putting relatively low balances on fewer credit card accounts. Whether you are new to the country or someone who needs a systematic help with credit enhancement, this guide will provide the blueprint to a good or even exceptional credit  score that will open doors to the lowest interest rate loans for your first house or dream car. click on the image below to pin this blog post to Pinterest for later!



Credit Score Defined

Credit score is the number that measures your creditworthiness based on your credit history. It ranges from 300 to 850, 850 being the perfect score. Credit score is a good indicator of the likelihood of a given consumer’s ability to repay his/her debt in full and on time. As a result, financial institutions use credit score as one of the key metrics considered when making lending decisions to lower default risk.

Credit scoring is a sophisticated statistical system and there are various ways credit scores are calculated by different financial institutions. However, Fair Isaac Corporation’s (FICO) scoring system is the most commonly used and I’m sure you’ve heard of it, too.

Below is a chart of FICO score distribution for American consumers based on 2017 data. As you can see, roughly 40% scored above 750. And the average FICO score reached the 700 mark in 2017 for the first time in the nation’s history.

FICO Score Distribution Percentage of U.S. - chart created by

Per Fair Isaac Corporation’s specifications, FICO scores are calculated based on the following five categories and weighting:

  • Payment history – 35%
  • Amounts owed – 30%
  • Length of credit history – 15%
  • New credit – 10%
  • Credit mix – 10%

According to my personal experiences, most large financial institutions don’t care how high your credit score is as long as it’s at least around 740. Once you’re at or above that mark, they will consider you for their lower interest rate financing options provided your other financial metrics including debt to income ratio is within acceptable range.

How to Check Your Credit Score and Receive Full Credit Report

The first step in the journey of your credit enhancement is to know where you stand today by checking your current credit score and review details in a full credit report issued by one of the major credit bureaus.

Major banks usually provide latest FICO score to their eligible customers for free every month. Within these monthly updates, you’ll be able to see your latest FICO score and the main reasons for your score fluctuation in the current month. With this type of up-to-date FICO score tracking service, you can keep a close eye on your recent credit usage. New credit card account opening and carrying balances on more credit cards would normally drive your FICO score down.

One good example of such valuable free service is from Wells Fargo. Check it out!

Wells Fargo Monthly Free FICO Score Service

Image source:

In addition to signing up for free monthly FICO score monitoring, you’ll also want to review your full credit report from at least one of the three major credit bureaus: Equifax, Experian and TransUnion.

Under the Fair Credit Reporting Act (FCRA) that took effect since 1970, every eligible American consumer is entitled to receive, upon request, one free credit report from each of the three credit bureaus every 12 months.

Your credit score and credit report may vary slightly depending on which credit bureau generates the information. This is in part due to various credit scoring methods and the source of your credit related information. If you’ve never requested full credit report before, I do recommend you to do so as soon as you can.

Here’s how:

  • Visit
  • Call 1-877-322-8228
  • Or, if you’re really old-fashioned, open the Annual Credit Report Request Form, select “OK” upon clicking the hyperlink, fill it out, and mail it to:

Annual Credit Report Request Service P.O. Box 105281

Atlanta, GA 30348-5281 free credit report request page

Image source:

You should follow the above contact methods to request your free credit report instead of reaching out to the credit bureaus directly as they will direct you to the contact information listed above anyways. Under current law, no other website is authorized to fill orders for free annual credit reports.

There are other ways that you can become eligible to receive a free credit report if any of the following situations apply to you:

  • Your credit card or insurance application was denied – request within 60 days of receiving the notice of denied application
  • Potential employer denied you employment opportunity due to information contained within your credit report – request within 60 days of receiving the notice of denied application
  • You’re unemployed at the moment and plan to look for a new job within 60 days
  • If you believe your credit report is inaccurate due to fraud including identity theft

In case you do not qualify for a free report, you can always pay a reasonable fee to buy a copy from any of the three credit bureaus. Alternatively, it would also be a good idea to use a professional credit monitoring service called myFICO to get your FICO scores and ongoing credit reports and monitoring.

How to Interpret Your Credit Report

Now that you have the full credit report in front of you after following the instructions mentioned above, let’s take a deeper dive into the report and understand what each section means.

We’ll use Equifax credit report as an example here. Below are the four types of information included in an Equifax report:

  • Personal ID information

Not surprisingly, this section of the credit report reflects your name, SSN, date of birth, and list of your current and old addresses.

Your previous addresses were reported to the credit bureaus because you received credit card bills or other credit related documents such as monthly mortgage statement at these addresses. Address itself isn’t a factor in credit scoring. However, during a pre-employment background check, employers may use the addresses reflected in your credit report to request state-specific criminal history report for every state you lived in within the past 10 years. This type of thorough background check is typical in the banking industry if you’ll ever be interested in applying for a job at one of the big banks.

That’s why you have every reason to pay close attention to your previous addresses disclosed and reach out to the credit bureau in question if you do spot errors that need to be corrected.

  • Credit accounts

This section lists your current and past credit accounts such as credit cards, mortgage, car loan, etc. It reflects the account opening date, account balance, credit limit and payment history for every credit account you ever had.

Closing credit card accounts may lower your credit score because that move lowers the amount of credit available to you. Instead, cut unused credit cards or put them away safely.

However, you should not open too many new credit accounts in a short period of time just to increase your available credit. That will actually lower your credit score.

  • Inquiry information

Historical inquiries into your credit report include the so-called “hard” inquiries and “soft” inquiries. “Hard” inquiries are requests of your credit reports from lenders from which you applied for credit cards, auto loan or mortgage. This type of inquiries tends to lower your credit score. After around 24 months, these “hard” inquiries disappear from your credit report.

“Soft” inquiries are typically inquiries made by yourself, your current lender for existing account monitoring, or credit card pre-approval letters. This type of inquiries has no bearing on your credit score.

  • Bankruptcies and collection information

If you ever filed bankruptcies, or had past-due accounts sent to collection agency against you, this section of the credit report will reflect that.

Depending on the type of jobs you applied to, adverse information like this may be one of the reasons a potential employer denies you employment opportunities as a result of a thorough background check. Not all information contained within your credit report are accurate. It is in your best interest to consult with professional credit services such as Credit Assistance Network, Inc. to help you contact the credit bureaus to dispute items on your credit reports.

Steps You Must Take to Improve Your Credit Score

By now you should have a good grasp of your current credit rating and what you need to work on based on detailed review of your full credit report. Now let’s walk through the steps:

  • Set up automatic payments for all your regular bills to avoid missing payments

We all can get busy sometimes, but that shouldn’t be the reason why our water bills or cell phone bills didn’t get paid on time. That’s why you should always establish “auto-pay” electronically for all your regular payments.

In the event that you did forget because you want to pay bills manually, call the billing company to explain the situation and ask them to waive the late fee as a courtesy. If this was a first-time “offense”, they’ll most likely do that for you. I personally have done that successfully because back in the days automatic payment online wasn’t a thing yet.

Usually companies will only report late payments to credit bureaus after you’ve missed it at least three times.

  • Apply for a credit card if you’ve never had one

It may not be that easy to get approval for your first credit card if you don’t have much credit history yet. You can start by applying for one of the department store cards (Marshall’s, TJ Maxx, Dillard’s, Macy’s, WalMart, etc.) to get things going.

  • Limit applications for new credit within a short period of time

Every time you apply for a new credit card or personal loan, a “hard” inquiry occurs which lowers your credit score. Even if you did get approved, the new credit also lowers your average credit age. Worst case scenario, if your application gets denied, wait for at least six months before applying again.

  • Pay off credit card balances every month if you can

If you have impulsive spending problem with your credit cards, destroy the plastics and use cash instead. Don’t spend your hard-earned money on interest payments to credit card companies. Instead, make every effort to pay down your outstanding balances as soon as you can. Once you develop disciplined spending habit, pull out your cards and earn those cash rewards with purchases that you really need! Must-read related post: Stay Away From 6 Types of Debts To Prevent Financial Disaster

Curtail your spending habit with your credit cards -
  • Avoid putting balances on too many accounts

It’s tempting to use department store credit cards to earn extra cash back. But if you really want to increase your credit score fast, try to stop using these store credit cards and only use one or two primary cards for your regular purchases. Carry balances on too many cards will definitely lower your credit score.

  • Avoid putting big-ticket items on credit cards if you’re applying for home mortgage in the near future

If you want to get approval for mortgage application in the near future and your debt to income ratio is close to the minimum requirement of roughly 40%, then it’ll be necessary to avoid purchasing big-ticket items on credit cards when it’s only about one to two months prior to the lender pulling your credit report. It takes a bit time for your payments to be reflected on your credit report, even if you paid it off right away.

How to Maintain A Good Credit Score

Maintaining a good credit score is not much different from what you have to do to achieve it. It is in your best interest to keep up with all the steps mentioned above. In addition, do the following:

  • Follow the tips mentioned in this guide to monitor your FICO score and fluctuations monthly

Pay attention to your monthly score update and take actions outlined above promptly in case yours dip down to a level that drops you out of your desired credit rating.

  • Prevent identity theft

Be extra careful when handling your social security number (SSN) and only provide that information to authorized institutions when there’s legal reason for them to collect SSN information. Identity theft is a reality. One of the reasons that you need to review full credit report is to ensure no one else has used your identity and obtained credit or committed fraud without your knowledge. If someone used your identity and committed crimes, unfortunately you will be the one responsible for cleaning it up and have the “criminal record” expunged from your profile. To avoid all that legal hassle and damage to your financial and social well-being, it is a good idea to sign up for IdentityForce, a professional identity theft protection and recovery agency that will give you peace of mind. As my reader, you can get 14-day free trial and 17% discount via this link and you can cancel anytime.


Achieving and maintaining an exceptional credit score (800+) is a long game. The real secret is to always pay your bills on time, live within your means and not spend the money you don’t have.

The tips and best practices outlined in this guide will surely help you in this journey if you try your best and follow them.

Cheers and best wishes to you!

Leave a comment below to let me know your thoughts or share your experiences and valuable insights with everyone here. 

I do manually approve blog comments before posting to ward off spammers. Please check the boxes below to receive follow-up comments and new posts in email so that you don’t miss the responses to your questions or comments!

Subscribe to the blog in the sidebar (desktop mode) or scroll down (on mobile) for more in-depth articles about managing finances, starting your own online businesses, etc. 

36 Replies to “In-Depth Guide To Improving Your Credit Score (With Personal Tips & Experiences)

  1. YES!!!! I can’t believe how thorough this post is. I’m working on my score as well and although it’s slow, it’s steady. Thank you so much for this post!

  2. I do agree with you that improving your credit is just a matter of long-term strategies combined with patience. We came from being folks who could never manage to balance our checkbook—no matter how much we made—to folks understanding how to budget, pay bills, and save for international travel, so we know what you have discussed works. Thanks for reminding us how far we’ve come.

  3. Good, thorough guide to FICO credit scores and ways to improve. My bank, Chase, provides an updated credit score free of charge each month and my Barclay credit card does the same. It’s good to keep up and maintain a high credit score, as it impacts so many aspects of your financial life. Thanks for the detailed information!

  4. I had no idea it was broken down into five categories by percentage. That’s helps a lot when determining what to focus on. Great post. Thank you!

  5. Hello,
    This is such an educational post! I really learned a lot. Having a good credit score is vital as an adult. Without good credit you can’t get a car, apartment or a home! Great tips!

  6. This is very informative post for naive people or people trying to build the credit. I wish some one had given me this tips few years back when I was new and trying to build credit. Will share with ones looking for this information.

  7. This is such a great post to understanding credit and how to build it! Question for you – how many credit cards should you have at one time?

    Is it bd if you stop using a credit card and it turns off?

    I currently have 3 credit cards, only one of which I really use on a regular basis, the other two are store-based so I was thinking about closing them and potentially opening a new one. Any recommendations for the best type to get?

    – Sarah from

    1. Hi Sarah, with time you will accumulate more and more credit cards, but you should only use 2 or 3 at the same time. You don’t need to close any store card or credit card, just keep them open and not charge them if you don’t find the need to use them. More in-depth tips are included in this post.

  8. Great information! I’ve never really needed to use my credit score or had forms of credit to build it up but I’m starting to work on that this year and that’s great advice!

  9. Great resource. You’ve given us a lot of information. My kids (in their 20s) are trying to establish credit. My daughter has a prepaid credit card and a secured bank loan to establish. Those things help but it takes 2 years to raise the score. My sons score dropped when he paid off his car. It’s a struggle.

  10. Excellent site you have here but I was curious about if you knew of any community forumsthat cover the same topics talked about in this article?I’d really like to be a part of online community where I can get feedback from other knowledgeable individuals that sharethe same interest. If you have any recommendations, please let meknow. Bless you!

Leave a Reply

Your email address will not be published. Required fields are marked *