Life Insurance
Insurance 101
Live Chat
Sign In
Apply Now
Modern Family Finances

5 Steps to an Improved Credit Score

By Jesse Sposato Jan 16, 2018

When I was in my early 20s, I thought of my credit card bill due date as a “ballpark” concept — I actually thought a day late here, a couple days late there didn’t matter.

As you can probably guess, this approach did not do wonders for my credit score, and I’ve worked hard to improve it ever since. A weak credit score can impact everything from your mortgage rates to your ability to get approved for a credit card.

Maybe this story sounds familiar, and you, too, would like to learn how to improve your credit score? Read on for easy-to-follow steps that are sure to help put you on the path to a better financial future.

1. Track Your Credit Score and Correct All Errors

The first step to improving your credit score is to know what it is. Order a free credit report, as well, and look at the whole report so you’re aware of the factors affecting your credit.

“Not even just in personal finance, but in life in general, a good rule of thumb is what gets measured gets improved,” Steven Fox, CFP®, EA, founder of Next Gen Financial Planning, a financial planning firm based out of San Diego, California, said over the phone.

And while you’re looking your report over, make sure there are no mistakes. The road to raising your score can be as simple as fixing an error on your credit report.

“Filing those disputes and getting those inaccuracies cleared on your report should have an immediate impact as soon as they remove them,” Fox said.

2. Pay on Time, Always

“Your payment history is the single most important factor,” Fox said.

For credit cards, it’s crucial that you pay the minimum amount due every month and on time, but when you can, it’s a good idea to pay more than that or even in full. Getting deeper in the hole is never fun, and neither is trying to dig yourself out (or explaining your debt to those who're close to you).

“The longer past due you are…and the more missed or late payments you have, the more your score is going to be impacted,” Fox said.

One fail-safe approach? “I like setting everything up on auto-payment,” he said. “Unless there’s a solid reason not to, I think everybody should have every bill on autopay.”

3. Keep a Low Credit Utilization Ratio

Your credit utilization ratio (try saying that five times fast!) is the portion of credit you’re using out of what’s available to you, i.e., your total credit line across all cards. And in order to improve your credit score, you shouldn’t use more than 20% of your available credit.

“Ideally, if someone is really looking to increase their credit score very quickly, going down to 10% of your available credit would move things even faster,” Stephanie Genkin, CFP®, founder of My Financial Planner, based out of Brooklyn, NY, said. Genkin suggested one way to do this besides reducing the amount you’re charging is to increase your credit limit.

All that takes is requesting an increase from your credit card company, though the amount you’ll receive depends not only on your credit score, but also your debt-to-income ratio (how much you owe compared to how much you make), the credit card company’s own guidelines, along with other factors. Fox weighed in on this subject, as well.

“They may not be able to increase it at all, or they may be willing to quadruple it,” he said. I’d suggest asking for double the limit. If you ask for too much, they’ll come back and say you were approved for x amount instead."

It’s a pretty easy process that can usually be done online in just a couple minutes. That being said, be careful not to increase your debt, too.

4. Keep Your Oldest Card Open and Active With a Low Balance

That card you’ve had forever that you just finished paying off and cant wait to cut up? Hold the scissors.

I know, I know, having one card would simplify things. But you get points on length of credit history, so keep it, but use it sparingly.

“Don’t cut up a national card because what you’re inadvertently doing is reducing your available credit, and now your credit utilization ratio is going to get hurt,” Genkin said. She suggests picking one low monthly bill to put on that card and setting it up to autopay.

“What you’re essentially doing is showing your card is alive and well…you’re using very low amounts of credit that’s available, and you’re paying it off on time and in full,” she said.

5. Don’t Open Credit Cards if You Don’t Need Them

One reason this is a bad idea is you don’t want to bring your average account age down.

If you have an account that’s 10 years old, for instance, and you open up a new one, the average age of your account is lowered, which means less assurance that you’re a reliable customer. Sometimes a credit card that offers rewards can be a helpful tool, but don't overdo it.

Another tip is to stay away from store credit cards.

“I’m not one to easily recommend cutting up cards, but the retail cards are evil,” Genkin said. They come with really high interest rates, and they’re only there for you to overspend. She recommends paying these cards off and canceling them.

“The fact of the matter is…they could actually hurt your credit score. And more importantly, they’re really expensive, and usually for stuff you don’t need.”

And remember, no matter your credit score, you can always bounce back.

“I’ve seen many people come back to very nice credit scores,” Genkin said. “Everybody’s given another chance.”

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific financial advice or to serve as the basis for any decisions. Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want an easy and fast way to purchase life insurance.


Subscribe to our newsletter


Written by

Jesse Sposato

Related Posts

Modern Family Finances

What You Should Know About Your Emergency Fund During COVID

The pandemic and economic challenges mean some families have exhausted their emergency cash. Here’s how to prepare for (and deal with) the worst.

By Jessica Sillers
Modern Family Finances

Your Winter Checklist: How to Prep Your Finances for the New Year

No time + needing to look after the ones you love = a quarterly checklist to help keep you on track, so you can get back to wiping boogers and giving snuggles.

By Allison Kade
Modern Family Finances

Your Fall Money Checklist: 5 To-Dos

As you get back in the swing of the daily grind, we’ve got some money to-dos to keep your financial life chugging along smoothly.

By Allison Kade

Fabric Picks

Life Insurance

Life Insurance for Millennials

Blame participation trophies or the fact that many millennials entered the job market around the time the Great Recession hit, but millennials sometimes have a hard time shaking a reputation for being stuck in extended adolescence. The truth is, the generation that coined “adulting” as a verb has been grown up for a while now. Most millennials have already seen our 10-year college reunion come and go, or we may face the shock of hearing we’re experiencing a “geriatric” pregnancy (at 35, really?). As your life grows to include more responsibilities and loved ones who depend on you, it’s time to consider whether life insurance might be the right next step.

By Jessica Sillers
Modern Family Finances

When Do We Feel Like an Adult? New Survey Shares ‘Signs’ of Adulting

Top signs of “adulting” include saving money, doing taxes, and signing up for life insurance, according to Fabric’s new research. Read on for more surprising insights.

By Allison Kade
Life Insurance

How to Get Life Insurance

Have you ever envisioned leaving money to your family when you’re gone? Here’s exactly how to go about getting life insurance.

By Melissa Brock

About Fabric

iOS

/

Android

Download Fabric’s iOS mobile app through the Apple App Store
Download Fabric’s android mobile app through the Google Play app store
Subscribe to our newsletter

© 2021 Fabric Insurance Agency, LLC

Accidental Death Insurance policies (Form VL-ADH1 with state variations where applicable) and Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT (all states except NY), and by The Penn Insurance and Annuity Company of New York (NY only). Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

All sample pricing is based on a 25-year old F in Excellent health for the coverage amount shown. All samples are for a 10-year term policy, unless otherwise stated. Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT. Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

Fabric Insurance Agency, LLC (FIA) is an insurance agency licensed to sell life and accident insurance products. FIA will receive compensation from Vantis Life for such sales. The NAIC Company Code for Vantis Life is 68632. See the Terms of Use for additional information regarding FIA.

A.M. Best uses letter grades ranging from A++, the highest, to F, companies in liquidation. Vantis Life’s A+ (Superior) rating, which was reaffirmed in April 2020, ranks the second highest out of 16 rankings. An insurer’s financial strength rating represents an opinion by the issuing agency regarding the ability of an insurance company to meet its financial obligations to its policyholders and contract holders and not a statement of fact or recommendation to purchase, sell or hold any security, policy or contract. These ratings do not imply approval of our products and do not reflect any indication of their performance. For more information about a particular rating or rating agency, please visit the website of the relevant agency.

Plan like a parent. is a trademark of Fabric Technologies, Inc.