You’re not alone if you are unhappy with your credit score. While increasing your credit score can seem difficult, it is easier than you think.

Why increasing your credit score matters?

Before learning how to improve your credit score it is important to understand why you should. Your credit score is one of the most important factors when it comes to your personal finances. A high credit score will help you qualify for lower rates on loans, credit cards that offer more favorable terms, better insurance rates, and a long list of other financial benefits.

A person’s credit score or FICO score is based on their payment history record and credit utilization ratio. FICO scores can range from 300 – 850, with 300 being extremely poor and 850 being nearly impossible to. The average credit score for Americans in 2017 was 704, which is considered good, but a score of 740 can significantly improve the home or car loan rates and credit card terms you can potentially qualify for.

How is a credit score calculated?

In a FICO scoring model, 35% of the credit score weight comes from payment history, 30% from credit utilization, and the other 35% from credit age, different types of credit, and number of inquiries. Carrying high balances on credit cards or simply having multiple credit cards in your name, along with many other factors – both positive and negative – can increase or decrease your credit score.

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