Credit Scores Matter – Yes, they do!

Have you ever been denied a credit application and wonder what could have happened? More than likely, your credit score, that three-digit number that rules your life, wasn’t good enough. Or it may be that you’re planning to borrow money in the near future and you’re hoping for a good deal on interest rates. As a potential or existing borrower, you need to take care of your credit score to enjoy the benefits that go with it. Credit scores matter!

Several factors can influence your credit score. Your score is mostly based on your credit history. For example, were you able to pay your credit card dues and other bills on time? Are you diligent in keeping your loan payments up to date? How many accounts and loans do you have? These are just some questions that come to mind when we talk about your credit score. 

What credit score should one have?

A standard credit-scoring system used by financial institutions is the FICO score. Your FICO score would range from 300 to 850. The higher your score is, the less of a risk you are. A credit score of 690 and above is considered good, and you can already reap some benefits. Aside from getting your loan approved, a high credit score can give you perks like a lower interest rate or better payment terms. For utilities and other services, a high score can get you no or lower initial deposits. Insurance companies also might access your credit before granting you a policy.


If a borrower has a credit score of below 689, the lender is taking on more risk to lend money. Thus they will charge higher interest rates. Or it may be that you will be required to have a co-signer or co-borrower. It is also less likely that you’ll get approved for that credit increase or loan application.

What is a good credit score?
What is a good credit score?

How do you improve your credit score?

Different people can have varied results as there are multiple factors to consider, and each individual’s financial behavior and habits play a huge role. But knowing the different variables that affect it can go a long way for improving your credit score.    

Below is a list of the primary information collected to form part of your credit score. Familiarize yourself with these factors, and you will find it easier to raise your credit score.

1. Payment history is the main factor of your credit score and accounts for 35% of your total credit score. Payment history reflects how an individual pays his loans. One should make it a point to be diligent and pay bills on time. Late and delinquent payments will lower your credit score. 

2. Total debt you currently owe, or credit utilization, accounts for 30% of your score. This is the ratio of your credit card balance, or used credit, over the available credit given to you. If you have high credit utilization, it indicates you’re spending too much and not paying enough. High credit utilization can negatively affect your credit score in a big way. The good news is that you can also raise your score dramatically by paying off your credit card balances.

3. How long your entire credit history is will account for 15% of your credit score. The longer your credit history is, the more payment history you have, which gives more information for your credit score. For this reason, it’s a good idea to keep your credit cards active even though you’re not using them.

4. Your Total Accounts will make up 10% of your credit score. A nice mix of car loans, mortgage loans, and credit cards would do well for your credit score.

5. Hard Inquiries happen when you apply for credit and the creditor runs your credit report. These will make up the final 10% of your score. Hard inquiries stay on your score for two years, and you want to have less than 3 to have this factor in the green.

Start Repairing Your Score today
Start Repairing Your Score today

How long will it take to improve your credit score?

Credit reporting agencies regularly review credit scores. And any updates or activity related to your credit standing would affect and be reflected on credit their score. It can go up and improve your ranking, or go down and make it worse. Depending on the statement or cutoff period, and what the change is, you can see changes in credit score within a few months.  

Though there is no fixed period or an exact promise when you will see the changes, it depends mostly on when the business processes credit reports. It can be daily, weekly, or monthly. Timing is important because the scores are immediately calculated as soon as the information comes in; it’s just a matter of when the cutoff date is.

There’s also no guarantee that your score will change at all, as any changes might not be relevant enough to get enough points to affect the numbers. So if you want to see positive movements, it is advisable that you not only make one positive change but a few significant ones.

Here are some positive moves you can make to improve your credit score:

1. Pay on time and keep your credit utilization low by paying as much as you can. Be responsible with your payments and you will see the effect on your credit score within six months. 

2. If you have a high credit card balance, a fast way to improve your score is to pay lump-sum just before your statement date. This is when strategic timing plays a role in increasing your credit score by having a better credit utilization rate. One way to reduce your credit utilization is to have multiple credit cards. Having numerous credit cards will increase your total credit limit. If you keep your spending low and have multiple cards, you’ll have optimal credit utilization.

3. Time to level up and ask your creditor for a higher credit limit. This is another fast way to increase your credit score. If you have been paying on time for at least six months, you can call and ask to increase your credit line. If your credit score in good enough, you’ll easily get approved. The higher the credit available to you, the better it is for your credit utilization, especially if you manage your balances well and keep them at a minimum. 

4. Reporting any negative errors on your credit reports and credit statements can also improve your standing. Be vigilant in checking your credit card statements and credit reports, and report any errors or omissions immediately.

5. Be careful not to have negative entries to your credit report as it will offset positive behavior and cancel out any positive change you have on your score. For example, you might have paid extra on one credit card. But, if you have another late payment on the same statement cycle, you might not see any positive change at all. Try to minimize these harmful activities like late payments as it is not easy to counteract them as they accumulate.

6. Keep in mind that it is not as easy to improve a credit score negatively affected by adverse events such as bankruptcy, foreclosures, delinquent accounts, closed credit accounts. Those on your records for a long time and are harder to offset with good practices. And if these negative factors are recent, they will have a more significant impact on your credit score.

Know Your Score

You are entitled to one free copy of your credit report every 12 months from each of the three credit reporting companies – Experian, Equifax, and TransUnion. Order online from Or you can visit a trusted credit report partner to view your credit report.



Leave a Reply

Your email address will not be published. Required fields are marked *