How Your Credit Score Goes Up

Making Timely Payments

The biggest factor in determining your credit score is whether you make your payments on time. If you're in the habit of making late payments, especially more than 30 days past the due date, this will be reflected in a lower FICO score. As you start to make on-time payments and continue the practice, the impact of late payments will lessen and your credit score will rise accordingly.

Paying Down Balances

Another way to improve your credit score is to pay down your outstanding balances. An important factor in determining your credit score is how much credit you use in relation to your total available credit, which is referred to as your credit utilization rate. The lower the ratio of used credit to available credit, the more positive the impact on your credit score. Paying down balances improves your utilization rate, so if you're able to make large payments, your can raise your FICO score quickly.

Fix Credit Report Errors

Errors on your credit report can result a lower score than you deserve. Common errors include the presence of balances you've already paid off or even an entry for an account that doesn't exist. You are entitled to receive one free yearly credit report from each of the three major credit reporting companies from AnnualCreditReport.com. If you find an error, respond in writing to the appropriate reporting company and include any documentation you may have which supports your claim.

Adding Installment Credit

If you're young and still trying to establish credit and only have a credit card, adding an installment loan like a car loan can give your credit score a boost. Making your installment payments as well as your credit card payments on time demonstrates that you can handle different types of credit, which can have a positive impact on your credit score. If you don't need to buy a car, consider applying for a small personal loan from a bank or credit union.