Improve credit score by 100: is it possible? Learn the best tips

A credit score value is the key indicator of your financial health. But more importantly, it shows banks, creditors and lenders the probability that someone will pay on time or default on payments. After analyzing the numbers they decide to approve services and loans, such as: 

• Personal loans;
• Mortgage rates; 
• Credit cards;
• Car insurance;
• Life insurance;
• Home insurance. 

There are all sorts of financial services you miss if you have a low credit score! 

Why is it important to improve credit score by 100? 

Those of us lacking in the credit department get the short stick in interest rates when it comes to finances. The reason can be simplified down to two factors: 

• No credit history: you’re just beginning your history story and still on the way to your first credit card. That means financial firms don’t know if they can trust you since there’s no history to account for; 
• Bad records on your report: it can happen because of delayed payments or other problems. What matters is that the number shows you’re not a trustworthy payer, so the risk of lending money or services is high, reflecting on high interest rates. 

Simplifying even more: if you aren’t considered a risk, the bank or financial companies can work with more competitive rates. That will be better in every aspect of your life, even when you decide to buy a house! So if you can improve credit score by 100 that’ll be a great help. 

Before you actually improve credit score by 100…

Before we being on tips to improve credit score by 100 it’s important to understand what it actually is. Your score is a number that goes from 300 to 850, usually based on the result of applying a formula to your record information that comes up with the number. Most reporting agencies nowadays use FICO scoring as a standard. 

Here we come across our second concept: report. This is a type of summary of your financial life that includes information about payment history, credit history and accounts. Believe us, this is a very thorough search of your data, since credit history can go back as long as eight years. 

What is a credit score based on? 

There is a lot of information involved on your score. Basically, every financial decision impacts on the result, which is why you must be very careful of your decisions. We’ll break down for your the most important aspects of any credit score: 

• Payment history: corresponds to 35% of your score, making it by far the most important aspect. Every late payment you ever made will hurt you here; 
• Amounts owed: corresponds to 30%. If you’re in debt it appears here, as well as your credit limit utilization on credit cards; 
• Length of credit history: corresponds to 15%. Here the reporting agency analyzes for how long you’ve been using credit. The older the account or card, the better; 
• Types of credit: corresponds to 10%. Juggling many types of credit, such as loans, credit cards and investments, shows you’re reliable. Just be careful not to default on payments; 
• Account inquiries: corresponds to 10%. How often have you or a lender check your background? Balance is important, if you check your background too often it’s problematic, but those who never check barely have any credit history, which could hurt them. 

Step by step to improve credit score by 100

Now that you understand more about the matter, we’re ready to improve credit score by 100. The good news is that you don’t have to read thousands of books on finances to get a significant raise. Just follow the steps below. 

1. Check your credit report to see how far you have to go

Everyone can get a free credit report once a year from the three major report bureaus. That’s really important to know where you stand and what your major flaws are. This can help you understand your main debts, payment history and whether you need more credit history or not. 

After you have this document read everything carefully and identify if there is any odd behavior. Some cases of identity theft end up with credit score problems since the scammers use a stolen identity to make loans or even acquire real estate. 

Once you notice problems with your report you must get in touch with reporting agencies to clear your name and get an instant improvement on numbers. We have more information about credit fraud and identity theft in this article. 

2. Pay your bills on time to improve credit score by 100

It isn’t rocket science to understand that to be able to improve credit score by 100 you stay away from further delayed payments. Even if you’re still managing debt or unpaid loans, be careful not to let everything snowball to create more problems. 

Set reminders on your phone and, whenever possible, use automated payment to make sure nothing is left behind. We know mistakes happen, but if you miss a payment and it’s been at least 30 days call your creditor. Pay quickly and try to convince the creditor not to report the delay. 

This is a very influential factor to be able to improve credit score by 100. 

3. Use automated credit card payment

If you don’t keep your credit use low when compared to your limits, your score will suffer greatly. To be able to do that, you must use your card wisely and, above everything else, pay it on time monthly. 

To make sure that your daily troubles don’t interfere with your memory use automated payments. It’s by far the best way to make sure everything is on time and you don’t get reported to a bureau. 

4. Keep your old credit cards and accounts

When someone attempts to improve their credit score, it typically involves paying delayed bills and getting rid of the old accounts that caused them. Well, that isn’t exactly advisable, since credit history is also part of the report. 

If you already have a few accounts and cards to your name, make the best use of them! Keep them active to show the bank that you’ve been on credit for a long time and that you’re trustworthy. When it comes to credit cards, having more than one allows you to avoid maxing out your limit so soon. 

5. Compare new credit options over a short time period

When you try to get credit, such as a personal loan or a home equity loan, it impacts your report negatively. But maybe you’re in serious need of credit or just looking for a credit card that can help you keep your finances healthy. What should you do? 

Our tip is to compare everything you need in a short span of time, such as a week. That way, agencies will understand that you’re just researching and this data won’t be a problem for your score. 

6. Mind your credit card limits

If you go back to the beginning of this article we explained that your credit limit counts a lot for your score. Reporting bureaus compare the limit you have in total and how much you already used. The closer you get to maxing out, the lower your score will be. 

The good news is that when you make monthly credit card payments you can stay away from that situation. Another tip is to spread your spending across more than one card. 

Let’s say you have US$500 limits on three credit cards. If you buy US$490 on a single one you’re almost out of limit. But by making a US$100 purchase on one, US$200 on another and US$150 on another you’ll be safe. 

7. Only apply for credit when you need it

This might seem obvious, but applying for credit when your score is already a problem isn’t recommended. Not only do many types of loans have the ability to keep your numbers low, but you’ll hardly get a low interest loan. 

Banks and financial institutions alike consider you a risk and lending money will come at a great cost. So we recommend you wait until your credit score is healthier to apply for new credit or just do that when it’s actually necessary. 

8. Become someone else’s authorized user

Do you have a trusted friend who has a high credit limit or good payment history? They could help you out by making you an authorized user. You don’t actually have to use the card, but when you become a user it gets added to your report. 

This way, the limit and timely payments become part of your history and can help you with a quick score boost. At least that’s the way it works with any accounts or cards that report to the three major bureaus in the U.S.