Improve Your Score

There are many things you can do that will impact your credit score. Let’s look at two of the most impactful things you can do to improve your score.

1. The amount owed

The amount owed accounts for 30 percent of a FICO score. In other words the amount of credit you owe as a percent of your total credit available will directly impact your credit score.

Let’s look at a real life example. This is a real Fico Score history of our John Doe. Back in December 2018, John Doe had a reasonably good score at 716. He started a slow but steady improvement in his score over the next 12 months ending up with a 799 FICO score the following 12 months That’s a 99 point improvement that took our John Doe from a “Good Score” to a score verging on “Excellent”. A perfect FICO score ranges from 800-850.

Let’s look at our second chart for John Doe to see how his Credit Card Debt shrunk from about $20,000 in December 2018 to about $5,000 in December 2019. And this drove his score up by 83 points. He has since then kept his balance owed at about $3,000 and his score is in the 820 range. Looking at the graphs related to his score, it looks like he was able to establish a plan to steadily pay down his credit card balances, then executed that plan.

But what else did he do? Nothing differently from normal, but his normal includes having a history of making on-time payments:

2. Payment History

Payment history accounts for 35 percent of a borrower’s FICO score. This simply means – DON’T make late payments.
So if you want to improve and maximize your credit score don’t make late payments and strive to keep your Credit Card total balances as a low % of your Credit available and preferably below 10%.