Credit Score (FICO) basics - How to improve credit scores

Submitted by markdeviz on Thu, 09/04/2008 - 10:01
Your credit score is a 3 digit number that tells creditors about your creditworthiness - how you've managed credit and bills in the past. This score helps lenders/creditors judge whether you're a potential borrower. Credit scores range from 300 to 850. In this article on credit scores, check out the topics below:

What is a good credit score?

A good credit score is the one that's above 700. Anyone having credit scores in the 700s and above can get credit at better interest rates than someone whose credit score is lower.

However, anyone with low credit scores, that is, in the range of 500-600 is considered as high risk to creditors. Those having low credit scores are usually charged high rates of interest. Depending upon the market scenario, they may not be able to get credit/loans due to low credit scores.

What is FICO Score?

The FICO score is the most common credit score used by creditors/lenders in order to evaluate a borrower's creditworthiness and is developed by Fair Isaac Corporation. However, scores offered by each credit reporting agency (CRA) or credit bureau may vary because not all creditors report information to every CRA. Moreover, the credit scoring models used by the bureaus differ slightly from one another.

FICO scores offered by Equifax and TransUnion are known as Beacon and Empirica. Consumers can get these scores online from MyFICO. Experian, another CRA also offers FICO score but consumers can't access it from MyFICO. Experian FICO scores are available only to lenders. However, Experian continues to provide its own scores on their website - ""

Your FICO score/credit score is calculated using the information available on your credit report. Credit bureaus can only calculate your FICO score if you have at least 1 account open for 6 months or more. Also, there should be at least 1 undisputed account reported to the bureaus within the past 6 months.

What factors affect credit (FICO) scores?

In general, there are 5 factors which affect your credit score calculation. The factors with their weightage of importance are given below:

  1. Payment history (35%): This includes information on -
    • How you've paid credit cards, installment loans, mortgages, etc.
    • Adverse public records such as bankruptcy, liens and collections.
    • How many and how long past due accounts and adverse public records have been on the report.
    • Accounts paid as agreed.
  2. Amount you owe (30%): This provides details on -
    • Number and type of accounts you owe.
    • Ratio of balance to total credit limit (revolving accounts)
    • Ratio of balance to original loan amount (installment loans)
  3. Length of credit history (15%): This includes the time period since you've opened different types of accounts.
  4. New credit (10%): This provides details on-
    • The accounts you've recently opened.
    • Number of recent credit inquiries.
    • Time since recent credit inquiries.
    • Time since accounts opened recently.
    • How you've rebuild credit after past credit problems.
  5. Credit/loan types used (10%): This factor includes the different types of credit/loans you've opted for.

What are the ways to improve credit score?

You can improve your credit scores if you're able to keep factors like payment history, the amount owed, the length of your credit history, etc in good shape. This is what credit score repair is all about. Below are 6 ways to improve credit scores/FICO scores:

  1. Avoid missed/late payments: A 30-day late payment may reduce your credit score by 50 points. Your account may be sent to collection due to repeated late/missed payments.

    Even if an account is in collection, pay it off and have the status updated on your credit report as "Paid collection". Alternatively, you can negotiate a "Pay for delete" agreement under which your negative listing will be removed from the credit report once you settle or pay off the debt in full. You should consult a credit counselor if you're unable to pay what the creditor is asking for. The counselor will prepare a budget for you so that you can allocate money to each debt payment.

    However, the best way to avoid late payment is to set up automatic bill pay through your bank. But make sure that the funds are being processed and sent to your creditors each month by checking your bank statement regularly.

  2. Pay off debt instead of moving it around: Maintain low balances (around 10% of the available credit) on your credit cards and revolving accounts. It's better to pay off your debt rather than transfer it from account to another. When you owe the same amount of debt but have fewer accounts open, it lowers your score further.

    Moreover, if you transfer debt and close unused accounts within a short time, it reduces your available credit limit while your debt balance becomes higher and the length of your credit history is reduced. This affects your debt-to-credit utilization ratio, which should be kept around 30% of your credit limit.

    However, if you don't close accounts, you need to keep them active. This can be done by making a purchase or two using the cards every 6 months. This will improve your credit utilization ratio and help you in repairing your credit score.

  3. How to shop for new credit: Try to shop for new credit/loan over a short period of time. This is because creditors/lenders may pull your credit report and generate inquiries which affect your credit scores.

    Usually, for mortgage and auto loans, all inquiries or credit pulls made within a 30-day period are treated as single inquiry. So, the sooner you complete shopping for new credit, the better it is for your score. And make sure that you don't open new accounts just to have a better mix of credit, because if you fail to manage your credit, it will have a negative effect on your credit scores.

    Moreover, too many new accounts opened at once will raise your available credit limit compared to the credit used, and thus reduce your score. New accounts will also lower the average account age and reduce your score if you have not taken other types of credit.

  4. Authorized users: When you add an authorized user to your credit card account, make sure that the user doesn't overspend. As the principal card holder, you'll have to make the payments, and if you can't afford it, your credit score would get the hit along with the authorized user’s score.

  5. Avoid store cards and small debts: Getting too many store cards isn't a good idea if you're trying for credit score repair. These cards are open lines of credit, and too many of them are considered risky by credit bureaus, especially if these are not affiliated with a national creditor (such as MasterCard, VISA, etc).

  6. Change in names: Let's say your name is Adriana J. Smith and that's how it's reflected on your credit report. If you change your name and drop the "J" when you apply for credit, then the credit bureau will prepare a separate credit report for you even though your address may remain the same. So, you need to notify the creditor as well as credit bureau if there's any name change.

Can you get credit scores free of cost?

Free credit scores or free FICO scores aren't available though you can get a free copy of your credit report once a year from each of the bureaus (as per Fair Credit Reporting Act or FCRA). One place you can purchase your credit score online is at or you can call their toll-free number - 877-322-8228.

Having a good credit score is important when applying for new credit or loans. The best way to maintain good credit is to paying on time, pay more than the minimum, and monitor your credit report at regular intervals for any inaccurate details.
Starkeisha35 (not verified)

Can I improve my credit score in a year from 400 to at least 650?

Sat, 03/06/2010 - 01:14 Permalink

Hi Star,

Credit score can definitely be improved but not in any definite amount of time. To improve credit score you need to first pull a copy of your credit report. Check if there are any negative and wrong listings. If there are any negative listings start paying off those on which you've been delinquent upon. To remove the wrong listings dispute the items with the creditor or the collection agency. If not possible to dispute with the creditor, you can dispute the items with the credit bureaus.

Payment details is the most important thing to keep in mind. It improves the credit score. However, for more details you can refer to .

Hope this helps.



Tue, 03/09/2010 - 12:15 Permalink
bonnie drew (not verified)

how many times can your credit be ran before it affects your fico score?

Wed, 03/10/2010 - 20:37 Permalink

Hi Bonnie,

There are 2 kinds of inquiries - hard inquiry and soft inquiry. Hard inquiry lowers your credit score, while soft pull doesn't lower your credit score. If you pull your credit report, it is considered to be a soft pull. Thus, it won't lower your score. You can check your credit report as many times as you want.

However, hard pulls are either initiated by you or by the creditors themselves. It is initiated by you when you try to get a new card or a loan/mortgage. When you apply for a card, loan/mortgage, the issuer or lender will check your credit report. This will lower you score. However, sometimes the hard pulls are done without your knowledge. These can be disputed.

Hope this helps.



Thu, 03/11/2010 - 08:07 Permalink
Marissa Smith (not verified)

I am a stay at home mom and my husband works. His credit is shot but my credit is fair around 650 How can I get a higher credit line without being employed?

Mon, 04/26/2010 - 22:09 Permalink


If you could provide more details on your credit, I will be able to help you in improving your credit score.



Thu, 05/27/2010 - 12:13 Permalink
Samah Juana (not verified)

I had a medical bill and then it went to collection because I did not have the money. I finally paid it off but it already went to collection. What can I do to repair my credit before I leave college.I also have a bill that is deliquent but I am paying it off. What should I do?

Sat, 07/31/2010 - 00:15 Permalink

Hi Samah,

You can send goodwill letter to the collection agency for the debt that has been paid off. As for the one on which you are making payments, you can request the collection agency to agree to "Pay for delete" (PFD) agreement. If the collection agency agrees to PFD, the negative will be removed from your credit report.



Sat, 07/31/2010 - 12:04 Permalink
Cory (not verified)

Does paying a little extra on car payments, mort etc. Help your credit score? or is this just a myth.

Tue, 08/03/2010 - 02:01 Permalink

Hi Cory,

Paying extra on your car loan, and mortgage does not do any extra good to your credit score. If you make on time payments, your credit score will increase. However, it is true that if you make extra payments towards your accounts, the debt gets paid off early, and the chances to miss payments lower.



Tue, 08/03/2010 - 10:20 Permalink

Hi Bill,

You need to provide details on your present credit and debt so that the members and guests in this community can help you in solving your problem.

However, to improve your score you need to maintain your on-time payments on your credit accounts. Check your credit reports for any wrong listings and negative listings. Dispute the wrong listings with the credit bureaus. Try to remove the negatives by paying off your dues and negotiating "Pay for delete" on these negatives.

You can also get added as an authorized user on a relative or friend's account. This person should have a good credit score. For more details on improving credit score refer .



Tue, 09/21/2010 - 10:56 Permalink
Col (not verified)

I was recently house hunting and unfortunately the mortgage company pulled my credit several times, but when I checked my report I found that each one shows up as a new inquiry even thought they were all within a 30 day period. If all credit pulls in a 30 day period are treated as a single inquiry how can I get this fixed on my credit report?

Sat, 10/02/2010 - 14:24 Permalink
Sherita (not verified)

Hi Carol my question to you is if my credit is bad and i really want to pay off some of my debt but financially i cant are there any organizations that can help me with this. i have a 2 year plan to be completely debt free.

Tue, 10/19/2010 - 00:10 Permalink

Are their any other methods I can use to build my credit? I hear there are the use of public filings that will give your credit a boost. Have you come across this information?

Mon, 10/25/2010 - 00:11 Permalink
K (not verified)

My father co-signed my Condo Mortgage 7 years ago.
Since then, I have re-built my credit and have a score in the 700's.
I have recently gotten married and my husband (whose credit is in the in the high 700's) and I are moving out of the area. My parents have offered to take over our mortgage and rent out our condo. Would it hurt my credit to remove myself from this mortgage?
Please advise.

Tue, 01/04/2011 - 02:30 Permalink
Trevor (not verified)

Dude, I was stoked to see my credit was still a mid score of 700 with 3 lates on a mortgage after 18 months. The landlord ran it. I was like What? that is so cool. I will be back in the game soon

Tue, 02/08/2011 - 01:15 Permalink
big mike (not verified)

i will have things dropping off my credit report this year how much do you think my score will go up

Sat, 02/19/2011 - 02:23 Permalink
Latticia (not verified)

I have 4 charge off's on my credit report and I paid them off at a settlement amount back in 2008. What can I do to get them to remove the account from my credit report as a charge off ?

Tue, 03/22/2011 - 17:14 Permalink
V Kapoor (not verified)

I have other family members who have extremely similar names as myself.Would a complete change of name help me rebuild a new credit score for myself since my family members are constantly running into debt.

Sun, 04/03/2011 - 19:55 Permalink
nadege fils aime (not verified)

how can i delete the close account on my credit report

Fri, 04/15/2011 - 02:20 Permalink

I don't think you can 'delete' a closed account ( it was a bad debt, I'm assuming). It has a 'fall off' date that it will (or should) come off your credit. You have to wait until that date arrives.

Sun, 05/15/2011 - 17:40 Permalink
Rick (not verified)

For the first time in 31 years I was late on a couple of credit cards. How long will it take to see any improvement in my credit score. I am current now.

PS - should i close small department credit cards?

Tue, 05/17/2011 - 20:29 Permalink

Hi, RICK. If your accounts, from the "small department" CC's are in 'good standing', I wouldn't close them at all. That's what i helping your credit stay 'positive'. Your score does go down a bit when payments are late. However....if you haven't had a 'late payment' in quite a few years, then it shouldn't be TOO bad. To be honest, I'm not sure how long a 'late payment' stays on your credit. The more you 'regular' payments on your CC, you will eventually see your credit score go up.

Wed, 05/18/2011 - 12:15 Permalink
Mila6666 (not verified)

Where can I go to find my credit score I'm from Canada and all the web sites I can find are just for us

Wed, 07/20/2011 - 20:59 Permalink
Scott Crawford (not verified)

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At its simplest, we could put up some widgets or debt reduction content that could add value to your site and give you monetization through DebtGoal.

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Wed, 09/21/2011 - 03:01 Permalink
summmerr1 (not verified)

what does it me on your credit report "transfered, closed, written off"

Wed, 09/21/2011 - 15:11 Permalink
Steven E. Silv… (not verified)

Hi, Carol.

The following are key factors in my credit report from Experian that adversely contributed to my FICO score:

1. Too few accounts currently paid as agreed (I don't understand this because I always pay off the entire montly balance on my credit cards. Although I have 3 credit cards, I use one of them 90% of the time).
2. Proportion of revolving balances to revolving credit limits is too high (Again, I always pay the entire monthly balance due, rather than paying the minimum balance)
3. Lack of recent installment loan information (I have had no installment loans for 13 years).
4. Too many inquiries last 12 months (I get new credit cards when they offer free airline mileage - and then I cancel the card after I receive the free miles. Since I now have 300,000 free airline miles, I will no longer apply for any more credit cards.

Can you give me some advice on how to improve my FICO score? Can I contact them directly?

Thank you.

Wed, 10/12/2011 - 18:40 Permalink
Moi (not verified)

Are these people allowed to harass us for more than 10yrs?
This was not a student loan or tax debt. Minor amount not even recorded on my credit report 20 yrs ago.

Fri, 12/16/2011 - 23:47 Permalink

According to the CB's, it would be 'poor'. Mine is about the same..all 3 of my scores. However..I consider my scores so much better than what they use to be. I really struggled to raise my score. Have you looked on your credit reports or just the scores of them? If you have items on your credit (IE-if you have debts that have been there more than the SOL of the state you reside in..) you cn 'dispute' them and there is a good chance you can have them removed from your credit. I did that..and it does actually work.

Tue, 01/10/2012 - 06:54 Permalink
TA (not verified)

Are Target & Dillards considered bad cards to have as far as lowering your score?Should I close them or just keep them low?

Tue, 04/03/2012 - 18:40 Permalink
SHELLY1977 (not verified)


Tue, 05/08/2012 - 19:42 Permalink
elizabeth schnitzker (not verified)

Hello, Koodo sent an outrageous bill to a collection agency, after not following my instructions of cancelling the services prior to my departure for a very long trip (4 months). After going back and forth, I arranged a payment and thought I was done with it. Just now I find out that their own mistake has affected my credit score for 6 years. How can I get this to be removed from my credit score file?

Thu, 06/07/2012 - 00:04 Permalink
Brandon (not verified)

How long can a debt stay on your credit

Sat, 06/16/2012 - 14:26 Permalink

Brandon....all states have different SOL's (Statue of Limitations). Usually a bad debt will stay on your credit for 7 years. I think a 'judgment' stays on for 10 years. The older the 'negative' debt stays on your credit, the less of an impact it will make.

Mon, 07/09/2012 - 15:44 Permalink
Amy Denzer (not verified)

Currently in a difficult situation with credit. I have owned a home for about 7 years now. I have been behind a few times but i have been current now for about a year. Unfortunetly i have the mortgage with an ex. He has not ever paid in the mortgage from the time the house was purchased until present. Now that I have a family of my own and he as well, I got a letter in the mail that i need to refinance or he will force sell. Talking with Wells Fargo, they stated that I needed to raise my credit score from 573 to 600 before they can help. I have found 4 in 1 bills that an be taken care of because they are small enough debts to pay them off in one single paycheck. how can i easily and effectively raise my score to protect my family's home from this other party?

Thu, 10/11/2012 - 20:48 Permalink
Anchal (not verified)

Call the hospital and see if they have any prgroams that can help. Last month when I ended up in the ER with my gallbladder we got put on a payment plan where we only pay off $28 a month until the bill is gone. The surgeons office also worked out a plan where we actually only have to pay half of what the bill would have been (because my dingbat husband cancled our health insurance back in May *smacks head against wall*). Was this answer helpful?

Sat, 08/31/2013 - 17:50 Permalink
Andressa (not verified)

The basis of this practice, is that, the inrdtsuy feels those that have poor or less than average credit ratings, are a risk as drivers overall. Just like how they separate the young male driver, under 25, that their statistics have shown that they cause more wrecks than the norm. I feel the stats for young men is probably pretty accurate, most teenage guys can't wait to get the fastest car they can afford, and they do tend to get into more trouble then the norm. I do not understand how your credit rating should effect your driving skills. Many people suffer a bad credit hit, without cause on their part. Someone may have cancer, for example, payments for treatment are huge, and naturally all your medical bills could back up, causing late payments. To say that, because of a medical situation, I have to pay higher insurance rates, is totally asinine! This regulation should be changed, I totally agree.

Sun, 09/01/2013 - 03:00 Permalink
Lidiane (not verified)

I agree that it should not be legal to check the cidert rating. A person's CR has absolutely nothing to do with driving ability. Check out the driver ability of some of those in the fancier cars. And to the previous poster not sure what state you are fortunate to live in, but in my state and EVERY OTHER STATE I have ever lived in, you are required BY LAW to have insurance, at least liability. So, are the government and insurance companies in with each other? You tell me.

Mon, 09/02/2013 - 15:08 Permalink
jan (not verified)

If you have 4 credit cards two are high two are low, is there any affect on your credit score card if you transfer some of the higher balances to the acts with less money?

I realize there is no difference in what is owed but can this work to increase ones credit score. The plan would be to pay on each card but pay off one at a time.

please send the answer to

thank you


Sun, 06/15/2014 - 19:45 Permalink
matzcrorkz (not verified)

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Wed, 08/06/2014 - 07:27 Permalink
stephenpks (not verified)

I was wanting to buy a house so I was checking my scores on credit karma credit sesame and quizzle had scores from 651 to 715 but the lenders had scores 608 to 662 is there any free fico scores?

Fri, 08/29/2014 - 03:44 Permalink
Tire88 (not verified)

Is settling a charged off acct.....that has a balance a good thing to do even if it is for do you know what will help and not.....

Sat, 03/19/2016 - 23:24 Permalink
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Sun, 10/23/2016 - 22:54 Permalink
Michae S. Johnson (not verified)

Their is a car rental on my report and I have never rented or leased a car
and have never lived at that address.

Tue, 03/21/2017 - 00:47 Permalink
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Wed, 10/03/2018 - 21:36 Permalink