How to raise your credit score

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Want a top credit score? Prepare for a little heavy lifting.

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Your credit score is a numeric representation of how you handle credit transactions, based on information in your credit report. Once you know how your credit history affects your credit score, it’s time to learn how to improve your score. By understanding which types of debt and other financial actions make the most impact, and by tailoring your priorities to those actions, you can take more control of your credit score.

The higher your credit score, the more access you have to the best deals on loans, credit cards, insurance premiums, and even apartment leases. Let’s look at four money moves that can help you raise your credit score.

One of the ways to establish and build your credit score fast is to get a credit card, use it, and pay it off regularly. Credit cards help your credit score for several reasons:

You don’t want to get bogged down with debt, but paying attention to the types of loans you have can help you raise your credit score. About 10% of your FICO credit score is based on your credit mix:

If you need a loan to buy a car or home, having one of those loans in addition to a credit card can help you raise your credit score.

One of the best ways to build and maintain good credit is to make all your payments on time and in full. A missed or late payment can immediately lower your credit score. The higher your credit score is to begin with, the bigger the impact of a missed payment.

Even if your on-time payments aren’t reported to a credit bureau, missed payments can affect your score. For example, your monthly gym membership payment probably isn’t helping raise your credit score. But if you miss payments or don’t cancel correctly, the gym can report these negative items and that can lead to a drop in your credit score.

Although the credit bureaus don’t publish their exact credit score calculations, a single missed payment could lower your score by as much as 100 points—and that payment stays on your record for seven years.

Do you have old credit cards you rarely use? You might think canceling them will help your credit score, but it’s likely the opposite. Open credit card accounts help you in two main ways:

Credit scoring formulas change regularly, and not all debt has the same impact. For example, medical debt has less of an impact on your credit score, and—unlike other types of credit blemishes—once an outstanding medical debt is paid or resolved, it will be removed from your credit report.

A debt that’s been referred to a collection agency (or collections department) is treated differently depending on how it’s reported. For example, if you’ve agreed to a settlement and you stick to the repayment plan, you’re likely to be listed as “paid as agreed,” which has a less negative impact than simply having a collections account reported.

Not all creditors report to credit bureaus. Double-check to make sure your lender or creditor is reporting to the bureaus if you want your on-time payments to help raise your credit score.

Federal law entitles consumers to free credit reports weekly from each of the three major credit bureaus through AnnualCreditReport.com. Check your reports regularly to make sure everything is accurate. Errors do occur, and if you believe incorrect information is hurting your credit score, you can usually resolve the issue by contacting the lender that reported the data.

If you want to raise your credit score, you need to be intentional about how you use credit and debt. It’s also important not to get in over your head. Borrow money only when you need to, and pay off your balances as quickly as you can. Use credit cards only for what’s already in your budget and pay them off each month.

When you make a plan to use credit responsibly and you stick to the plan, you’re more likely to maintain a higher credit score.