What makes your credit score go up? You will be more successful at increasing your credit score by learning what causes it to move up and down.
The primary focus of this writing is to teach you how to avoid seeing your credit score drop. While teaching you how paying your utility bills can help.
Next, we’ll discuss which areas to focus on to see a fast credit score increase. And if you can make your credit score go up in as little as 3 to 6 months.
Why My Credit Score Goes Up and Down
There are two aspects causing your credit score to go up and down. They are the credit reporting agencies and your credit history activity.
Here, I am giving you a quick big-picture explanation. As a result, it will help you understand how the solutions to make your credit score go up will play a part.
Credit Reporting Agencies
The credit reporting agencies are made up of three different agencies; Experian, Equifax, and TransUnion.
So each of these agencies uses a different type of calculation model to create your score. As a result, not every creditor will report their data to all three agencies.
It is also possible for lenders to pull your credit history data differently depending on what type of credit you are requesting.
Some lenders may only run your credit history through one of the credit report agencies. While other lenders will run all three credit reports to calculate an average score between them.
Example: A mortgage lender wants to see more of your credit history than a credit card lender will.
More Articles You May Be Interested In:
What Happens If I Don’t Pay My Credit Card Bill
How To Break A Bad Habit In Your Finances
How The New FICO Score Will Affect Your Credit Score
Credit History Activity
Most importantly, always be aware of what is on your credit report. For instance, the items on the list below could cause your credit score to go up or down drastically.
While reading these, keep in mind these can appear on your credit history if you have them.
- Legal Public Records
- Bankruptcy
- Tax Liens
- Court Judgements
- Note: These can remain on your credit history as negative marks for 7-10 years.
- Hard inquiries Credit Card
- Auto Loan
- Mortgage
- Consolidation Loans
- Payment History
- Missing payments – Negative effect
- Paying Down a Loan – Positive effect
- Paying on time every time – Positive effect
- Debt to Credit Ratio (Credit Utilization)
- Calculation of how much of your available credit you are using (available credit means all of your credit card limits combined)
- Are your credit cards maxed out
- Most ideal usage is only 30% of your total available credit
- Changes in credit
- Increase in an interest rate could lead to increasing your debt
- Increase in your credit limit could increase your debt to credit ratio percentage if you use it.
- FICO Formula Changes (occurred in 2020)
- Any time the FICO company changes their FICO Score Formula it will impact your credit score; either in a good or bad way
Subscribe and you'll receive our weekly posts right in your inbox. You'll also be one of the first to be notified when our free budget course opens. Hope to see you there!
Does Paying Bills Increase My Credit Score
When I pay my utility bills, can it make my credit score go up?
In short, no. Utility bills are not considered credit accounts therefore; they are not reported to the credit agencies.
However, if you do not pay your utility bills for 6 months the accounts will be considered delinquent. In addition, they will be reported as negative marks on your credit history.
But there is a way to adjust this issue a little. The Experian credit bureau is offering a tool they call, “Experian Boost.”
You give the credit bureau the ok to access your accounts monthly. In turn, every month you pay your utility bills on time it will be reported on your credit history.
Before you run out to get this set up consider the following.
This information will only appear on your Experian credit report. The NY Times also found evidence of a 19-point increase for some individuals who have less than five credit accounts.
Two out of Three users with more than five credit accounts only saw up to a 10 point increase.
If you lack a credit history, the Experian Boost tool could be a big help to create one. For those of you struggling to increase your credit score this doesn’t seem to be very effective.
What Makes Your Credit Score Go Up Fast
Now let us get to the information you really came here for! The information in this section will have the greatest impact on your credit score.
The greater the impact the more points you can accumulate at one time. Always keep in mind, no matter what you do; making your credit score go up will take time.
Payment History
Your payment history calculates 35% of your credit score. This is the largest impacting item creditors report.
Start working with your creditors to get all of your accounts caught up if you are not already. Then all you have to do is focus on paying each bill on time every month.
Debt to Credit Ratio (Credit Utilization)
Your credit utilization calculates 30% of your credit score. This is the second most impacting item creditors report.
To be in the best standing it is good to only use 30% of the total credit you have available to you. Start working toward paying down your credit card balances.
It may not hurt to call your creditors to ask if you can have a credit limit increase to get a quick jump. As long as you don’t use the new credit limit, it will help decrease your credit utilization.
Age of Your Credit Lines
The age of your credit card accounts calculates 15% of your credit score. This is the third most impacting item your creditors report.
As you pay off your credit cards do not close them. If you are able to keep from using them take advantage of them.
The longer you own a credit account the higher your credit score will climb. This will prove to creditors that you are responsible when you borrow and make them confident you’ll pay them back.
Final Takeaways for This Section
Request your credit report from the three credit bureaus, if you haven’t already. Then Dispute any errors on the report with the credit bureaus to get them removed.
Next, do not let your credit card accounts remain unused for too long. After 2 years of no activity, creditors are starting to close accounts.
This could cause a drastic drop in your credit history. Just charge a tank of gas or groceries on the credit card then pay it off in full the next month.
This will keep it active as you continue to build your good credit.
More Articles You May Be Interested In:
What Happens If I Don’t Pay My Credit Card Bill
How To Break A Bad Habit In Your Finances
How The New FICO Score Will Affect Your Credit Score
Can Your Credit Score Go Up In 3 to 6 Months?
Now it is possible to see your credit score go up in 3 to 6 months. Simply because your credit activity is reported monthly to the credit bureaus.
Once you start making positive changes stay consistent. Because reliability is all creditors are looking for.
To see your credit score go up in 3 to 6 months do the following:
-
Focus on:
- Payment History
- Credit Utilization
- Age of Credit Lines
-
Try to make payments on one maxed out credit card twice per month
- One payment for the minimum balance by the due date
-
One payment for any extra amount you can afford. Try $20 – $100 dollar range
- Note: The additional payment will ensure your credit history will reflect decreasing debt when your creditor reports it.
- Request a credit limit increase for $1,000.
Your Take Action Guide
There is a lot of information packed into this one writing. To help you get started on a path to success try the take action guide outlined below.
Your First Steps To Make Your Credit Score Go Up
- Get caught up on your bills and pay them on time every month
-
Pick a credit card to start paying off (I paid the smallest balance first for a quick win)
- Pay the minimum balance on the remaining credit cards you have to keep them in good standing. (Remember step one!)
- Try to make two payments per month on the card you are paying off if you can afford it.
-
Leave your credit lines open
- The older an account gets the more responsible you seem to creditors
- Only do this if you can stop using credit
-
Consider requesting a credit limit increase of $1,000 on at least one credit card
- This will decrease your credit utilization percentage
- Avoid too many hard inquiries on your credit and legal action.
If you have struggled with bad credit and debt for a long time these steps could seem over simplified.
I know what it’s like to have $1,800 coming in and $2,200 going out every month. How I got off the hamster wheel was by avoiding credit.
When I stopped using credit my bills quit increasing every month. It will be hard and feel awkward at first.
You will be able to start saying no to certain purchase choices. However, at the end of it all stopping and saying no is only temporary.
When your credit score is 720 or better and your debt is dwindling you will be able to spoil yourself every once in a while, responsibly of course!
References
https://www.debt.org/credit/credit-report-fluctuations/
https://www.experian.com/blogs/ask-experian/does-paying-utility-bills-help-your-credit-score/
https://www.nytimes.com/wirecutter/money/does-experian-boost-actually-work/
https://www.investopedia.com/how-to-improve-your-credit-score-4590097
https://www.moneytalksnews.com/7-fast-ways-raise-your-credit-score/
Subscribe and you'll receive our weekly posts right in your inbox. You'll also be one of the first to be notified when our free budget course opens. Hope to see you there!
