Six strategies to improve your credit score

Your credit score is like your financial track record. It tells creditors how you've managed your finances and helps lenders, landlords and others predict how likely you are to make payments on time.

Bad scores could result in you paying higher interest rates or getting turned down for credit altogether. A good score could result in better credit offers, higher credit limits, lower interest rates, and faster credit approvals.

Credit scores are calculated based on information in your credit report. The Fair Isaac Corporation (FICO®) score is probably the most popular. These scores typically range from 300 to 850, with average scores between 600 and 700. Scores above 700 are good and a sign of low risk to lenders. Scores below 600 are a sign of financial instability.

Here are six strategies to improve your credit score.

Strategy 1: Know your score and what's on your credit report.

Before you can improve your credit score, you need to know what factors on your credit report could be bringing it down. You can get a copy of your credit report without affecting your credit score.


Check your score six to 12 months before applying for a loan, so you have time to improve it.
Check your report from all three reporting agencies (Equifax, Experian and TransUnion). Each agency may record your credit history differently, resulting in different scores.
Contact the reporting agency and the creditor in writing to dispute any mistakes or omissions on your report that could bring down your score.
Visit to see your credit report for free once a year from each of the three reporting agencies. Talk to a Starion Financial banker for assistance and to better understand your report and score.

Strategy 2: Pay your bills on time.

Payment history accounts for 35% of your credit score.


Avoid bankruptcy, foreclosure, lawsuits, judgments and other collection items that will lower your score. Bankruptcies stay on your credit report seven to 10 years.
Don't be delinquent or let late payments go to a collection agency.

Strategy 3: Keep debt balances low compared to your overall credit capacity.

The amount you owe makes up 30% of your score. Owing money isn't necessarily bad, but being overextended is.


Keep balances low on credit cards and manage these and other lines of credit responsibly.
Pay off debt rather than moving it between credit cards. the most effective way to improve your score in this area is to pay down your revolving credit.
Be mindful that closing credit cards shrinks your available credit capacity.

Strategy 4: Maintain your credit history and long-term relationships with creditors.

The length of your credit history comprises 15% of your credit score.


The longer you pay bills on time, the better your score.
Begin responsible credit management at an early age. Even a gas card with a low credit limit can help you improve your score over time.
If you've been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information.
Closing old accounts may shorten your credit history.

Strategy 5: Apply for and open new credit accounts only when you need them.

New credit and credit checks account for 10% of your credit score. Adding new accounts makes creditors wonder whether you'll be able to pay your new bills.


Don't finance a lot of new purchases from retailers or finance companies.
Search for one loan instead of many different lines of credit.
Do your rate shopping for a loan within a focused period of time. (The FICO score counts credit checks within a 14-day period as one inquiry. In addition, the score does not include credit inquiries from the most recent 30 days.)

Strategy 6: Balance your revolving and installment lines of credit.

The type of credit accounts you have makes up 10% of your score.


Manage all of your credit cards, retail accounts, installment loans, finance company accounts and mortgage loans responsibly.

Remember, your score is always changing, so you can change it for the better. Let Starion Financial help you understand your personal score and manage your financial health.