raise credit score

How Can I Raise My Credit Score?

So, you’re looking to raise your credit score. Great! We can’t blame you either—having a low credit score can be expensive.

Increasing your credit score reduces the cost of financing—the higher your score, the lower the interest rates you’ll qualify for.

Whether you’re building your credit from scratch or rebuilding after your scores have taken a hit, we wanted to provide a few important tips that can help you start increasing your credit score.

First, it’s best to understand what factors into your score.

Think of your credit as a plant.

With care, time, and patience, you can grow your score to be strong and healthy!

Here are some of the factors that determine how your credit score is calculated:

  • P = Payment History: 35% of your total score
  • L = Length of Credit History: 15% of your total score
  • A = Amounts Owed: 30% of your total score
  • N = New Inquiries: 10% of your total score
  • T = Types of Credit: 10% of your total score

Now that you know how your score is calculated, let’s list out some actions you can take to increase your score.

Review Your Credit Report

You’ll want to start by getting a copy of your credit report and reviewing it. This helps to make sure all the information on it is accurate. But don’t worry—checking your credit won’t have an impact on your score! Annualcreditreport.com provides you with access to all three credit reports (TransUnion, Equifax, and Experian) at no cost.

Maintain a Healthy Payment History

Since payment history accounts for the largest portion (35%) of the credit score, it’s important that all accounts are being paid as agreed. If you have any accounts that are currently past due, the quicker they’re brought current and reporting as such, the quicker your credit score can increase.

Having a history of timely payments to all creditors makes a more creditworthy borrower. 

Don’t Close Credit Accounts Unless You Have To

Length of credit history makes up 15% of your credit score. Fair Isaac Corporation (FICO) will measure the amount of experience you’ve had in using credit. The longer a credit account has been open and active, the better it is for your credit score. Opening a new account can lower the average age of all of your accounts as well as closing an older credit card.

This is one of many reasons you want to work with a credit counselor to help you build your credit!

Keep Your Credit Usage Below 30%

Take a close look at your revolving accounts (credit cards are the most common examples of revolving accounts) to verify the balances. You want to be sure that the balance on any revolving account does not exceed 30% of the limit.

Say you have a credit card with a $1,000 credit limit. 30% of the credit card’s limit, in this case, would be $300.

Credit Limit – Credit Usage = Available Spending Balance
($1,000 – $300 = $700)

Use the calculator below to see your credit usage!

Credit Utilization Calculator

Key tip:
Avoid going over (or even getting close to) your credit card’s limit, as this can cause your credit score to decrease.
Be Mindful When Applying for Credit

Whenever you apply for new credit, it’s considered a “hard inquiry.” A hard inquiry occurs when you apply for a new line of credit, regardless if it’s approved or denied. These types of inquiries account for 10% of your credit score.

Applying for credit only when necessary helps to eliminate excessive inquiries. It’s best to stay under four inquiries per year.

Keep in mind that while hard inquiries can potentially impact your score, soft inquiries cannot. A soft inquiry happens when you give permission for someone (like an employer) to check your credit report. The reason soft inquiries do not have an impact on your score is because they aren’t associated with a specific application for credit. 

Have Multiple Types of Credit

The “types of credit” category represents 10% of your credit score, and having a variety of credit shows that you can manage different loan types.

In life, it helps to have a healthy balance—the same goes with credit. Having both installment accounts (personal loans and auto loans) and revolving accounts (credit cards) makes a diverse credit profile.

While it can take several weeks (or even months) to see a change in your credit score, using these tips can help you develop good credit habits along the way. The sooner you work on improving your score, the sooner you can enjoy all the perks that come with having a high credit score!


Wondering how you can implement these tips into your individual financial situation? Visit our website today to find out how you can meet one-on-one with a Pelican Credit Counselor!

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