COVID-19 RELIEF - Call Now for info to relieve debt and Payments. (be prepared with information about your debt & financial situation) MUST have OVER $10,000 in Debt Balance.

Call For Covid-19 Debt Relief+1 (866) 376-9846 Click To Call For Covid-19 Debt Relief
How to improve credit to have excellent credit scores

Ready to improve your credit score but don’t know how? To improve your credit score so that you can have excellent credit, you must first understand the credit score calculation algorithm. Transunion’s credit score algorithm uses the following five metrics to determine a credit score.

how to improve credit score so that you have excellent credit

How are FICO scores calculated?

  1. 35% of your FICO credit score is attributed to the Payment History appearing on each of your credit reports
  2. 30% of your FICO score is attributed to the Amounts Owed
  3. 10% of your FICO score is based on New Credit appearing on your credit report
  4. 10% is based on Types of Credit in Use
  5. 15% is based on the Length of Credit History

Let’s take a closer look at each metric and understand how each one can be used to improve your credit score.

Payment History

Creditors want to know that they will get paid! For this reason, payment history has the biggest impact on a person’s credit score.

The best way to take full advantage of this first metric is to pay your bills on time every month. It is also important to know, one of the fastest ways to ruin your credit report and score is to have late payments on it. You can establish payment history faster by paying your bills in full multiple times per month. Set up auto-pay to ensure your balances get paid every month on time.

Should I pay my credit cards and home equity line of credit in full, to improve credit scores? 

When it comes to credit cards and a home equity line of credit, these credit accounts should be paid in full every month. By paying your credit card balances in full every month you avoid 100% of interest. Like with credit cards, a home equity line of credit is open-end, it stays open even after paying it in full and you can continue to draw from it. Consequently, by paying down your home equity line of credit you can improve your credit utilization ratio, which we’ll talk more about below under the category “amounts owed”. Is it OK to only pay minimum payments? Read this page next, for the answer.

Is it better to pay my mortgage and car loan balance in full or make monthly payments? 

Make monthly payments on your mortgage and car payment, rather than paying these types of debt in full.

Here’s why: If you pay your mortgage and car balance in full, the accounts will get closed and your credit score gets lowered.

What is the new credit score system?

The new credit score system is called FICO Score 10. This new credit scoring model puts more weight on a consumer’s account balances and missed payments over the last two+ years. An article in Forbes estimated that “40 million consumers will see their scores drop as a result”.

To benefit the most from this new credit score model, try to pay credit card balances in full every month and never miss a payment. If it’s too late and you’re already behind on credit card payments with maxed out accounts, consider a debt validation program.

Experian Boost is another new and free service offered by Experian to help improve a person’s credit score. This option allows you to get credit for past payment history on utility bills, including cell phone payments. Here’s how to use it: Just log in to your credit report, via the app or online at, and you’ll find a button to click that says “Experian Boost”. Click that button and follow the prompts.

Amounts Owed

The amount you owe on revolving credit accounts has a significant effect on your credit score because your balances affect your credit utilization ratio. Experian defines credit utilization ratio, as: “The amount of revolving credit you’re currently using divided by the total amount of revolving credit you have available. In other words, it’s how much you currently owe divided by your credit limit.”

How fast can you raise your credit score? Is there a way to raise it by 100 points in 90 days?

If you owe $10,000 of credit card debt, utilizing 80% or more of your available credit, your credit score is being negatively affected by this high debt to credit ratio. Golden Financial Services recently did a study with a client: The client owed approximately $9,600 between six credit cards, utilizing 81% of their available credit. In one shot, the client paid off all of their cards in full. Within 90 days their credit score went up from 645 – 730. Although this is not a 100-point gain, it’s close to it. Paying off maxed off credit card debt is the fastest way to raise a person’s credit score.

Can’t afford to pay your debt on your own? Learn how debt relief programs work.

The Impact of New Credit on Your Credit Report

Applying for new credit too often can lower your credit score because you end up with inquiries on your credit and no new available credit. Credit inquiries, slightly lower credit scores and stay on a person’s credit report for up to two years. However, if you apply for a new credit card and get approved, within a few months your credit score will improve because you now have additional credit available, improving your credit utilization ratio.

Warning: If you apply for a new credit card, get approved, and then go and max the card out, don’t expect an improvement in your credit score. The only way to use a new credit card to increase your score is to use the card and pay the balance in full that same month, or at the very least make sure that the balance stays well under 50% of the credit limit. You want to build high credit limits, not high debt.

Types of Credit in Use on Your Credit Report

If you want to hack an 800+ credit score you must have a variety of credit accounts. Credit reporting bureaus like to see a long payment history on:

  • credit cards
  • mortgage/car payment
  • student loan/installment loans

Example of a strong mix of different types of credit to maintain the highest possible credit score:

  • 3-7 open-end revolving credit accounts, like a line of credit, HELOC and credit cards
  • mortgage, car, student loan payments (if you have two out of three of these types of credit accounts and pay on these debts monthly, over time your credit score will grow faster than if you only had one of these three types of credit on your report)


Length of Credit History

According to Experian:
“Consumers‘ FICO® Scores Increase Most From Their 50s to 60s. The largest jump in FICO credit score® Scores happens from consumers‘ 50s to 60s. The average FICO® Credit Score for those ages 50 to 59 is 703 as of Q2 2019, compared with 733 among those ages 60 to 69.”
Your credit score continues to rise over time, as you continue to use and pay your accounts every month. As you age the benefits only continue to build. For that reason, never close out old cards, keep them open.

If you’re a college student with no credit, here’s a trick/tip to hack a high credit score fast!

Get added to one of your parent’s credit cards. Just make sure:
  1. Don’t get added as an authorized user! Make sure to get added as a joint account holder.
  2. Make sure the card has a low–no balance.
  3. Get added to one of their oldest cards that have the highest credit limit, so that you can show a longer “average length of credit history”.

If you’ve enjoyed this article we recommend you check out this next article: How your credit score impacts your financial future 

Speak Your Mind

Note: Your email address will not be published!

Go Back

Choose your debt amount and continue!

Min Max
Click to Continue

Are you behind on your payments?

What state do you live in?

Just One Step Left!

The phone number does not match!

Do You Qualify For Debt Relief?

Best Debt Relief Programs in the Nation

Debt Free in 18-48 Months & Save up to 40%

IAPDA Certified & Accredited Debt Relief Company

Subscribe To Our Newsletter

Subscribe To Our Newsletter

Join our mailing list to receive the latest financial news and free financial education from industry-leading experts.

You have Successfully Subscribed!