April 7, 2023

How to Increase Your Credit Score

Learn 6 ways that renters can increase their credit score, and why it's important for renters to strengthen their financial health.

How to Increase Your Credit Score

Whether you're buying a new house, shopping for car insurance, or trying to get approved for a rental apartment, your credit score is often the first factor that lenders or landlords look at to evaluate your financial responsibility. 

With inflation and economic uncertainty on the rise, it's essential that renters evaluate their finances and find opportunities to strengthen their financial health — beginning with their credit score. Here, we will explore what a credit score and credit report are and why they matter. We will also provide you with nine strategies to help you increase your credit score.

What is a credit score? 

Your credit score is typically a number between 300 and 850, and it is used to predict the likelihood of you repaying a loan on time. A higher credit score shows a lower risk of defaulting on credit payments, while lower credit scores indicate a higher risk. Credit bureaus calculate this number using scoring models, such as FICO and VantageScore, with information from your credit report. The factors that go into this calculation include:

  • Your bill payment history
  • Current unpaid debt
  • How many loan accounts you have, and what types
  • The length of time your loan accounts have been open
  • Your credit utilization (i.e., how much of your available credit you are using)
  • Your new applications for credit

Each credit bureau has their own criteria for determining what is considered a "good" or "excellent" credit score, but generally, credit scores between 670 and 739 are considered "good," and those ranging from 740 to 799 are "very good,” and 800 or above is “excellent.”

That said, there is no one credit score per person. Instead, multiple credit scores are available to you — and lenders — because this score depends on the data used to calculate it, the scoring model, the source of your credit history, the day it was calculated, and many other factors. 

In other words: your credit score reflects a single moment in time and can fluctuate based on your credit behaviors and data from your credit reports. It's not set in stone and requires ongoing monitoring and financial responsibility.

Understanding your credit report

A credit report provides a complete and thorough summary of an individual's credit history and contains detailed information about your credit accounts, payment history, and credit inquiries. This information is utilized by financial institutions such as lenders and creditors to assess your creditworthiness, determine whether to approve a credit application or loan, and offer you other financial services. 

Your credit score is essentially based on information available in your credit report. It's essential to regularly check your report for errors and inaccuracies that can negatively impact your credit score and take steps to address any negative items on your report.

How does a credit score impact your life?

This three-digit number is a track record of your ability to borrow money and pay it back within the right time frame and agreed-upon terms. 

A high credit score demonstrates that you are a trustworthy person to lend to, particularly if you borrow money frequently and always pay it back in full and on time each month. The higher your credit score, the more reliable you are in the eyes of lenders, and the easier it will be to get approved for new loans or lines of credit in the future. 

Some of the most common situations where your credit score impacts your life include: 

  • Requesting a loan for a home or automobile: Depending on your credit score (among other factors), lenders can approve or deny you a loan or charge you a higher or lower interest rate. This is true for people trying to get a mortgage, an auto loan, or a personal loan. 
  • Renting a home or apartment: For many landlords, a tenant's credit score is a window into their financial stability — and an indicator of what kind of tenant they will be when it comes to paying rent on time. A good credit score signals that they can be trusted to pay rent on time each month. 
  • Utility services: Many utility providers check your credit score before approving your request to set up gas, electricity, or water services in your name to ensure that you can pay your bills on time. If you have a low credit score or a history of missed payments, the utility company may require you to pay a deposit before they activate your services.
  • Applying for a credit card: If you apply for a new credit line, you must meet the card issuer's minimum criteria for income and creditworthiness, including a high enough credit score. If you don't, you may be denied from opening a new credit card. 
  • Buying insurance: A high credit score has the potential to lower your premiums on various types of insurance. In fact, better credit can decrease your car insurance rate altogether for many insurers and across most states. 
  • Starting a new job: While employers can't see your credit score specifically when they run a credit check, they do have access to similar information that lenders do. In some cases, they may look at your open lines of credit, outstanding balances, loans, late or missed payments, and more to determine whether you are financially responsible. 

All this is to say: almost all of your most important financial decisions involve your credit score. That's why it's important to take steps to increase your credit score and prove your trustworthiness to lenders. 

How often should you check your credit score?

It's a great idea to check your credit score at least once a year to make sure that there are no errors or fraudulent activities on your credit report. You can gain access to a free copy of your report at least once a year from each of the three major credit bureaus — Equifax, Experian, and TransUnion — by visiting AnnualCreditReport.com.

However, if you're planning to apply for credit, like a loan or credit card, or have experienced a significant financial event, such as bankruptcy or foreclosure, you should check your credit score more frequently.

By keeping a close eye on your credit score and report, you can take steps to enhance your creditworthiness and safeguard yourself against identity theft and other financial scams.

9 strategies to increase your credit score

While it may seem daunting, improving your credit score can be simple with the right strategies. Here are a few ways to stay on top of your finances and strengthen your credit score:

1. Pay bills on time

Paying bills on time is the most effective way to raise your credit score because it shows lenders and service providers they can depend on you. To stay on top of your bills and avoid missing payments, you can set up automatic payments, add due dates to your calendar, or send reminder notifications to your phone. You should also monitor your checking account to ensure you have enough cash to pay bills and credit card balances in full. 

2. Check your credit report for errors

Checking your credit report regularly for errors is important in maintaining a good credit score. Errors in your credit report can negatively impact your score and may result in higher interest rates or even denials of credit applications. Inaccurate information on your credit report could include accounts belonging to someone else, incorrect personal information such as your name or address, or a record of late payments that were in fact paid on time.

3. Use credit cards responsibly

While regularly using a credit card helps you build your credit history, it's best to focus on reasonable, everyday purchases like groceries or gas rather than big expenses you can't afford to pay off. Being responsible means paying off your monthly balance on time and using your credit consistently — in other words, not overspending. The bottom line? Try to avoid spending money you don't have. 

4. Build your credit file

Lenders want to see your history of using credit and paying it back. For this reason, it's important to start building your credit history now if you haven't already. Start with one credit line, such as a credit card — rather than opening multiple cards at once — and focus on using it frequently for everyday purchases, then paying it back in full at the end of the month. Once you get in the habit of using it responsibly, you might consider opening another line of credit.

5. Diversify your credit

By having a mix of different types of credit accounts, you demonstrate that you can responsibly manage different kinds of debt. However, it's important only to take on debt that you can afford to pay back on time, as missed or late payments will have a negative impact on your credit score.

6. Use rent reporting tools

If you rent your home, another great way to improve your credit score is by leveraging rent reporting tools. . Azibo Credit Boost allows renters to report their on-time payments to the three major credit bureaus. This enables individuals to boost their credit score with rent payments, a major monthly payment typically not included in credit reports. The payoff is significant: in a large-scale Credit Builders Alliance-sponsored pilot program, 97% of participating residents stated that reporting their on-time rent payments was an effective way for them to build their credit. Azibo Credit Boost offers a two-month free trial, then costs an affordable $4.99 per month to report your payments to the three major credit bureaus — Equifax, Experian, and TransUnion.

7.  Try Experian Boost

This service works by adding positive payment history from your utility bills, such as your phone, water, and electricity bills, to your credit report. This can benefit those with a limited credit history or just starting to establish credit. By showing a history of on-time payments for these types of bills, you can demonstrate your ability to manage credit responsibly and potentially increase your credit score. Renters can use Experian Boost in tandem with Azibo Credit Boost to maximize multiple strategies to improve your credit score.

8. Become an authorized user

Another option for people who still need to build a strong credit history is to ask a responsible family member to add them as an authorized user on their accounts. This means that the primary cardholder agrees to add you to their account — and you benefit from their responsible credit behavior and payment history. While this is only a temporary solution, it can be a good start if you are at the beginning of your credit journey. 

9. Leave old accounts open

Contrary to popular belief, closing a credit card account — even if you've paid off your debts — can actually lower your credit score. Why? When you close a longstanding account, your maximum credit limit across your credit lines is lower, and your credit history may be shorter. So if an old account has been paid in full and on time, there's no need to close it, even if you don't use it. 

Stay on top of your credit score with Azibo

When implementing these strategies, it's important to note that increasing your credit score won't happen overnight. But with consistency, effort, and the right financial choices, you can steadily increase your credit score and improve your overall financial health. 

To get started with Azibo Credit Boost, simply create or log into your Azibo account and choose an annual or monthly payment plan. Once Credit Boost is activated, Azibo will begin reporting your rent payments, and you'll be on your way to increasing your credit score.

Final recap: How to increase your credit score

Keeping a close eye on your credit score and taking action to improve it over time is essential.

While it may seem daunting, many resources are available to help you understand and manage your credit. By taking small steps like paying bills on time, reducing debt, and checking your credit report regularly, you can boost your credit score and enjoy the benefits of a strong financial standing.

Remember, your credit score is not set in stone and requires ongoing monitoring and financial responsibility. With patience and perseverance, you can achieve financial success and secure a brighter future for yourself and your loved ones.

Credit Score FAQs

How can I raise my credit score in 30 days?

It's important to understand that raising your credit score in 30 days is challenging, and achieving significant improvement in such a short period may be difficult. 

However, you can try a few strategies to help boost your credit score quickly. First, you should ensure you're paying all your bills on time, as payment history is the most crucial factor affecting your credit score.

Next, try to pay down any outstanding debts, particularly on credit cards, as high credit utilization can hurt your score. Another option is to ask your credit card company to increase your credit limit, which can lower your credit utilization ratio. Finally, you can dispute any errors or inaccuracies on your credit report, which could help improve your score if corrected.

Remember that it's essential to maintain good credit habits over time to see a lasting improvement in your credit score.

What is the fastest way to raise a credit score?

The fastest way to raise a credit score is to focus on improving the factors that significantly impact your credit score. This includes paying bills on time, reducing credit card balances, and avoiding new credit inquiries.

You can also consider becoming an authorized user on someone else's credit card account with a positive payment history, which can improve your credit utilization ratio and overall score. Another option is to work with a credit counseling service to help you develop a plan to pay down debt and improve your credit score.

While there is no guaranteed way to quickly raise your credit score, focusing on these key areas can help you see improvements in a relatively short amount of time.

How can I improve my 700 credit score?

A score of 700 is considered good by most credit bureaus, and you're already on the right track.

To further improve your score, you can focus on maintaining healthy credit habits such as paying your bills on time, keeping your credit card balances low, and avoiding new credit inquiries.

When you already have a good credit score and consistently pay your bills on time, adding new credit accounts to your credit mix can help diversify your credit portfolio and improve your score. It's also essential to review your credit report regularly and dispute any errors or inaccuracies that could negatively impact your score.

You can continue strengthening your credit score and financial standing by consistently practicing good credit habits and monitoring your credit report.