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How to Improve Your Credit Score: For Beginners

It’s best to think of improving your credit score as a marathon, not a sprint. Here are the five best ways to increase your credit score!
April 1, 2024

There’s a lot of information out there on the web with tons of tips and tricks to help you increase your credit score, and it can be a little overwhelming, can’t it? Well, here at Rain, we’re going to give it to you straight. These are the five best ways to increase your credit score!

What is a credit score?

You’ve probably heard the phrase “credit score” before and have an idea what it is, but just in case you don’t, here you go: a credit score is a number from 300 to 850 that tells lenders how to  assess your creditworthiness.

Why good credit matters

If your credit score is high, you’re more likely to be approved for things like credit cards, home mortgages, car loans, even deposit-free cell phone contracts, and more (conversely, if your credit score is low, the chances of you being approved for these things are drastically reduced). A high credit score is often equated with financial freedom and “purchasing power.”

How your credit score is calculated?

Your credit score is tabulated via a variety of factors that are each weighted differently,  like your length of credit history, your ability to pay on time, the overall amount of credit that you have access to, and any outstanding debt you may have. Your score will land anywhere between 300 and 850, with 850 being a perfect credit score – the closer your score is to 850, the more creditworthy you are according to lenders!

List of factors that affect your credit score

Payment history: This is a big part of your credit score, accounting for 35% of your FICO score (the score most used by banks, credit card companies, and other lenders). Making on-time payments for any credit accounts you have is critical – one late payment can dramatically affect your score.

Credit utilization: It doesn’t matter if you have $1,000 in credit that is available to use or $100,000 – it’s about the percentage you’re currently using. A general rule of thumb that if you’re using 30% or less of your available credit, that’s great for your score. This particular factor comprises 30% of your FICO score.

Credit age: Taking up 15% of your FICO score is the length of your credit history. The longer you have open credit accounts, the higher your score will go. Every month counts!

New credit applications: Although they account for only 10% of your FICO score, new credit applications definitely make your score take a hit – every time you apply for a new card or loan, for example, expect your score to drop a few points.

Other factors make up the final 10% of your FICO score, such as the number of total credit accounts you have.

How long does it take to improve your credit score?

It’s best to think of improving your credit score as a marathon, not a sprint. Your score will be intrinsically connected to you for your entire life, so it won’t change overnight. However, there are some simple steps to take that will set you up for success in your financial future!

Fastest way to improve credit

The quickest way to improve your credit is simple: pay your bills on time. By not making on-time payments, you are making things harder on yourself in the short-term and in the long-term!


Steps you can take now to raise your credit score

If your score isn’t where you’d like it to be – don’t stress, there are plenty of ways to raise it! Here are some of the best strategies:

Pay your minimum balance on time

So when we told you a few paragraphs ago that paying your bills on time is the singlest best way to improve your credit score, you can stop sweating – we didn’t mean pay your accounts off completely on time! Simply making the minimum payments will do wonders for your credit score in the short AND long-term.

Have the right number of credit cards

Surprise! There is no “right” number of credit cards. Your credit journey is all about balance – pun intended. In the long run, ten or more open credit accounts will only be beneficial to your score and your financial wellness – but opening up five cards in a short amount of time will not be beneficial! Think about it: sure, you’d have new cards which means a higher overall credit limit, but your overall age of credit will plummet drastically, not to mention the toll that opening so many new accounts will take on your score. Remember, it’s a marathon, not a sprint.

Like we’ve said, it’s all about balance: add an account when you need to, and when you can live with a short-term negative hit on your credit score. And never close an account unless you absolutely have to – you want to keep that age of credit history nice and long!

Try to have different types of accounts

There are many different kinds of credit accounts. Aside from the usual credit cards, there are retail store credit cards (often with a much lower credit limit that make it easier to get approved for!), small personal loans from your local bank (this author’s credit history started with a simple $1,000 loan taken out on advice of his parents, actually), auto loans, and more. The more variety of credit accounts you have, the better it will look for lenders!

Increase your credit limit

The traditional way to increase your credit limit is to apply for (and get approved for) a new credit account! But sometimes simply asking for something can pay off big time: if you’d like a larger credit limit (which, as we know impacts our credit score) – just ask! A lot of major banks and credit card companies have tools on their websites to ask for a credit line increase, but if you don’t want to go that route, a simple phone call to their customer service department can work wonders. The worst they can say is no, with no hit on your credit score.

Pay off your debt

This may seem like a no-brainer, but it’s true. Sometimes it’s helpful to take a deep-dive into your monthly payments. If you’re making no headway on paying off the balance and basically just paying off your interest payment every month, it may be time to apply for a balance transfer credit card – these cards are designed for you to transfer your balance (for a small fee, but it’s worth it in the long run!) to a new card and begin making payments interest-free for as long as 18 months in some cases.


Dispute any inaccuracies

Believe it or not, sometimes wrong information gets connected to our own personal credit report. And nobody will point it out unless you do it for them. So take a look at your credit report and make sure there aren’t any inaccuracies – and if there are, you are within your rights to dispute them to the credit account lender directly.

The most important thing to remember is that increasing your credit score dramatically is not something that can be accomplished in one day. Maybe you’re about to reach a time in your life where you’d like to purchase your first home, for example. And maybe your credit isn’t where you’d like it to be – after all, you’d love to get the best rate available for your future mortgage. But that’s fine, because in due time, after using these tips to increase your credit score, you’re going to start seeing a positive change. And once that ball gets rolling, it gets easier and easier to keep it moving!

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