Two of the most important topics I’ll ever cover on my blog are the use of credit cards and credit scores.
After graduating from college, I really wanted a higher credit score. However, it seemed as if no matter what I tried, it wouldn’t budge. I did some research to find out what I was doing wrong.
Over the last few months, I’ve been able to raise my credit score by 100 points. I’ll relay exactly what I did, and what worked for me.
Full disclosure, the following steps may not work for everyone. I can’t guarantee your score will go up exactly 100 points by following these steps. I’m sharing this information in the hopes of helping anyone out there who wishes to raise their credit score and isn’t sure where to start.
For what it’s worth, my oldest credit card is a basic Capital One Journey Student Rewards card that I got when I graduated high school in 2013. I still use this card today – but I am shopping around for a new one.
Before I start, here is a chart outlining factors that influences a FICO credit score. This is the most commonly used scoring model:
| Influencing Factor | Explanation | Influence on Credit Score |
| Payment History | Payment history shows how well you’ve paid your credit accounts over time. Late payments can lower your score, just as payments made on-time can raise your score. | 35% |
| Level of debt/credit utilization | The credit utilization rate is the ratio of your credit usage to your credit limit on all accounts. A lower rate is better than a higher one. | 30% |
| The age of credit | The “age” or length of credit history is how long any given account has been open. The longer, the better. | 15% |
| A mix of credit | Credit mix refers to the type of accounts that make up your credit report. This includes student loans, credit cards, and car loans. | 10% |
| Credit inquiries | Credit inquirieshappen when you or a business accesses yourcredit report. Hard inquiries can lower your score. | 10% |
Here’s how I raised my credit score by 100 points:
1. I kept up with the minimum payments between my credit card and student loans, and made these payments on time.
When I graduated from college, I had a hard time keeping track of my credit card payments. I made late payments quite a few times. This is because I didn’t have automatic payments. I would log in to my credit account manually and make the minimum payments each month.
Once I automated my credit card payments, I never missed a payment. Those dreaded e-mails that read, “your credit card payment is coming up” helped me stay on track. They gave me ample time to check and ensure my checking account had enough money for automated payments.
This is crucial: making your payments on time is the key to raising your credit score. It’s boring but simple. There is no secret to it.
Making a credit card payment late can have the following negative effects on your credit score:
- Lower your credit score significantly
- Cause fees to be charged to your account
- Increase your APR or interest rate
- increase the APR on other credit accounts (I know, this is unfair!)
2. I paid off all of my credit card debt.
I know this is an obvious one, but I’ve had my credit card for about 7 years and never bothered to pay it off in full. The process took several months. It’s very clear after 6 months, this caused the biggest increase to my score by far.
For some time, I had been paying the minimum on my credit card payments. This was around $100.
The purchase interest rate (APR) added another $150 each month.
So I was spending about $100 each month with the card, plus paying the interest rate of $150 (a total of $250), but only paying $100. This was a net payment of -$150 each month! And I had the nerve to wonder why I wasn’t getting anywhere.
Paying off my debt little by little decreased my credit utilization rate, which was 100% to start.
What is a Credit Utilization Rate?
Your credit utilization rateis the ratio of your credit card balance to your credit card limit.
For example, let’s say your credit card limit is $4,000, and you owe $3,000 on that account.
Your credit card utilization rate is $3000 / $4000 = .75, or 75%.
A high utilization rate means you’re using a majority of the credit that’s been loaned to you. A high rate over a long time can lower your credit score and make lenders think you cannot pay off your balance each month.
Similarly, a low credit utilization rate means you’re using a small amount. Low is good, it raises your credit score and shows lenders that you’re able to pay off a balance.
A good rule of thumb is to try to keep your credit utilization rate under 30%.
Note that your credit score is re-calculated each billing cycle. For me, this was each month.
If you’re not seeing an immediate change to your credit score after making a payment, it’s probably because the update will appear in the next billing cycle.
Paying off my credit balance increased my available credit across all accounts.
Whenever I made payments to my credit balance, there was an increase in my available credit, which increased my credit score by a few points.
There are two ways to increase your available credit.
One is to pay off your debt. Another is to call your credit card company and ask for an increase in your credit card limit.
I would only do this if you plan on paying off your balance and wish to raise your credit score. If you have an overspending habit or don’t care about raising your score, I wouldn’t recommend this as it might make things worse.
3. I didn’t open any new credit accounts.
According to my credit report, I haven’t opened a new credit account since my last request for a credit account in 2017.
Because of this, I didn’t have any new inquiries on my account for the past 3 years.
What exactly is a hard inquiry?
Credit inquiries, or hard pulls,happen when you or a business accesses yourcredit report. Such as, for a car loan or a new credit card. Hard inquiries only affect your credit score by a few points – but it’s best to try to stay away from them.
How can I get rid of a hard inquiry?
If you’d like to remove a hard inquiry from your account, you can try to dispute the inquiry with the company that pulled your report, or with your creditor. If you choose not to dispute, the inquiry will stay on your report for about two years.
4. I didn’t close any old credit accounts.
Generally, try to keep credit cards open, even if you’re not using them. This increases your credit utilization rate and allows you to benefit from a long credit history, specifically if it’s an older credit account.
There were two credit accounts on my report that were closed automatically due to non-use.
One was a Victoria Secret Pink credit card account. I was tricked into opening this one when I was a teenager. Since I never used it, it was closed automatically after a few years.
The second closed account was a Wells Fargo credit account that I opened in 2017 to buy furniture for my first apartment. I bought the furniture at a discounted rate and was able to pay it off within one billing cycle. Since I never used the account again (and because I heard really bad stories about Wells Fargo credit accounts), the account closed on its own after a few years.
If you have more than one credit account, find out which one is the oldest. If this account isn’t a store credit card, but bank-issued – I would try to keep it open by using it for small-ticket items or putting a monthly subscription on it. The age of your credit has a decent influence (about 15%) on your score, so the younger credit accounts don’t matter as much.
My oldest account is 7 years old, which is average. I use this card regularly and will keep it open even when I find a better “main” credit card. I also put my Netflix monthly payment on it so that it remains active even when I don’t use it.
Wrap Up
Thank you so much for reading my article! Learning about credit accounts and scores can be boring stuff. Please check out the rest of my blog for more personal finance tips and information!
