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How To Increase Your Credit Score

Without Going Broke


When you enter adulthood, one major factor that will influence your life is the dreaded credit score. You’ll find that your credit score plays a role in many different parts of your life like buying a home or a car and some employers factor your score into the hiring process, depending on which industry you’re working in. So how do you increase that score without going broke in the process? We have some tips.

What is a Credit Score?

First, what is a credit score and why does it matter? In short, a credit score is used to determine how likely you are to pay back borrowed funds. Basically, your credit score decides whether you are a risk to the lender. The credit score matters because this will be used for determining whether you get a loan for a home mortgage or a car and what interest rate you’ll pay for those loans. Your credit score can also decide whether you’ll be eligible for credit cards and certain employers take the credit score into consideration when deciding if they’ll hire you.

Credit Score Ranges

What is considered a “good” credit score? Credit scores are three digit numbers that range from 300 to 850. In general, scores of 580-669 are considered “fair”; 670 to 739 are considered “good”; 740 to 749 are considered “very good” and anything above 800 is considered excellent. Lenders will usually require a credit score of at least 620 if you want to buy a home with no down payment. For car loans, that number is around 661 or higher if you’re looking at a conventional loan.

How Do I Raise My Credit Score?

There are many credit repair programs out there. Some claim to help raise your score by 100 points in a matter of months. Most of these credit repair programs require that you pay them some type of fee for them to help you. There’s good news: you can raise your credit score on your own without going broke in the process. All it takes is a little dedication and discipline. A few free ways to increase your credit score include:

  • Review your credit report regularly. It’s important to check over your credit report at least once a year to make sure there are no errors that might be affecting your score. You can obtain a free credit report yearly by visiting Experian, which is one of the major credit reporting agencies. If you do find errors, you can easily report them and get them removed.
  • Pay your bills on time. Whether you pay late or on time has a major impact on your credit score. This section accounts for approximately 35% of your total score.
  • Pay down your revolving balance. If you have the means to pay more than the minimum payment each month, you definitely should. Credit scores are affected by the amount of credit that has been extended to you and how much of that credit you’re actually using. This portion accounts for approximately 30% of your score.

The Takeaway

There are several completely free things you can do to raise your credit score. Consistency is extremely important and it is imperative that you establish good credit habits right away. Pay on time, pay down your revolving balance, and keep an eye on your credit report and have errors removed. Some people will see a score increase in the first 30 days, but, realistically, you can expect to see major improvements within about 6 months.

To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.


Author FJS

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