Raising your credit score by 200 points can give you access to more opportunities, including a better set of loan terms or a lower interest rate. This can save you thousands of dollars over the course of your loan — especially with a long-term loan like a mortgage.
We’ll go over how to improve your credit score, such as with a Credit Builder Plus loan up to $1,000 and by having our partner LevelCredit report all your payments (not just loans) to the credit bureaus!
We’ll also explain the factors that go into your credit score, as well as how long it’ll take you to build up your score. Finally, we’ll show you a few techniques that you can use to raise your score by 200 points.
Overview: What Makes Up Your Credit Score?
First, it’s important to understand the factors that go into your score and who decides on your score. Let’s take a closer look at where your credit score comes from.
Your credit score comes from the items on your credit report. A credit report is a document that tells creditors how you’ve used credit in the past. It’ll show you missed credit card payments, the types of loans you’ve taken out and whether you’ve filed for bankruptcy.
There are three major credit reporting bureaus: Experian, Equifax and TransUnion. These companies collect, store and organize the data on your credit reports. They also each issue you a credit score from the information contained in your report. Credit scores are important because they allow creditors to see a snapshot of your credit history without spending hours reading your whole report.
There are a few different methods that credit reporting bureaus can use to calculate your score. The score that most lenders look at is the FICO model. The factors that go into your credit score include:
- Your payment history (35%): Your payment history is a record of how often you pay your bills on time. More timely payments result in a higher credit score.
- Your credit utilization (30%): Your credit utilization is the percentage of your total available credit you use every month. Maxing out your credit cards will lower your score.
- Length of your credit history (15%): Creditors trust borrowers who have a long history of managing their credit. Leaving your accounts open longer raises your score.
- Your credit mix (10%): Creditors like to see that you have experience managing a few different types of credit. Diversifying your credit types can raise your score.
- New credit inquiries (10%): Borrowing a ton of money at once is a red flag for lenders. When you apply for a new line of credit, your score will temporarily drop so you don’t apply for too much credit all at once.
Now that you know what goes into your score, let’s take a look at what lenders consider a good score and a bad score. The FICO scoring ranges are as follows:
- Very poor: 300-500 points. You won’t be able to find a credit card or loan very easily if you have a poor credit score.
- Fair: 580-669 points. Lenders consider borrowers with a “fair” score to be non-optimal. You may be able to find a loan or credit card with a fair score, but you’ll pay more in interest.
- Good: 670-739 points. Only 8% of people with a “good” credit score go on to be seriously delinquent on one of their accounts in the future, according to data from Experian. You’re a much more appealing candidate for loans and cards if you have a credit score in this range.
- Very good: 740-799 points. You’ll get better rates from lenders If you have a “very good” score.
- Exceptional: 800-850 points. Lenders see people with exceptional credit scores as very dependable borrowers. An exceptional score means you’ll get the best interest rates on the market and exclusive credit card offers.
The maximum credit score that you can have is 850. Perfect scores are very rare but it’s not impossible to make it into the perfect credit club with time, patience and a plan.
How Long Does it Take to Build Credit?
There is no timeframe on how long it takes to raise your credit score. The amount of time it’ll take to see your score rise depends on what types of items are on your credit report, your current score and how long you’ve had your accounts.
Your credit score will take at least one full month to change because credit reporting bureaus usually only collect payment data once a month. However, if you’re trying to raise your score by 200 points, it’ll take you much longer to reach your goal. It may take anywhere from six months to a few years to raise your score by 200 points. The best way to build and repair your credit is to stick to your credit rebuilding plan.
How to Increase Your Credit Score by 200 Points or More
Are you ready to start improving your credit score? Use these tips and stick with them to see your score rise.
Use a Credit Builder Loan
Using your credit card and paying it off every month is an excellent way to help boost your score. However, creditors want to see that you have experience managing both revolving and non-revolving types of credit.
A credit card is a revolving type of credit. Revolving credit “refills” after you pay it down and allows you to use it again and again. For example, let’s say that you have a credit card with a $1,000 line of credit and you put $200 worth of expenses on it. Your line of credit is now $800 until you pay down your balance. Your credit line restores itself to the full $1,000 as soon as you pay off the $200 you spent.
You can only use non-revolving credit lines once. As soon as you pay off a non-revolving account, your lender closes your account. Personal loans, mortgage loans and student loans are all examples of non-revolving credit types.
Consider a credit builder loan if you want to add a little diversity to your credit portfolio and use method proven to help build credit. Credit builder loans are small, low-interest personal loans that help you improve your score.
With some lenders, you’ll get a sum in cash and can spend that money on almost anything, from new furniture to a lingering bill. Then, you pay back the loan and interest with monthly payments. Your loan provider reports the payments to the credit reporting bureau. As long as you don’t fall behind, your score will likely go up.
Are you looking for an easy way to boost your credit score? MoneyLion Credit Builder Plus members have access to up to $1,000 at a low APR in a credit builder loan with just a few clicks.
Get Your Bills Reported to Credit Bureaus
Did you know you can boost your credit with all types of payments? You can! Our partner LevelCredit will report your rent, utility, and other payments to the major credit bureaus — and give you access to your credit score and key credit insights — for just $6.95 per month. LevelCredit is an amazing way to power up your payments by using them to boost your credit score!
Employ a Credit Tracking Service
Put your extra dollars towards your debt and choose a no-cost credit tracking service like the one available from MoneyLion. MoneyLion offers you a one-stop-shop for credit improvement tools.
Keep Your Payments Consistent
Your payment history makes up about 35% of your FICO credit score. This means that the best way to improve your score is to build up a history of positive payments.
Are you guilty of missing a payment due date or two? It can lower your credit score. Prioritize your payments with a new organization strategy. Sit down with all of your loan and credit card statements and write down how much you owe on each account, your minimum payments and your due date.
Then, input the date into your cell phone calendar or write them down on your desk calendar. You may also want to authorize autopay if your creditor allows it. Autopay automatically deducts your minimum payment on your account’s due date so you won’t have to remember it on your own.
Luckily, MoneyLion does the remembering for you and automatically schedules your Credit Builder Plus payments around your pay dates.
Keep Your Utilization Low
Just like you should build a solid rapport of timely payments, you should also work to keep your credit utilization low. Credit utilization refers to how much of your available credit you use. Most lenders like to see you use less than 30% of your credit every month. However, if you want to see the fastest boost in your score, you should aim to use 10% or less of your credit every month.
If this isn’t possible, consider asking your lender for a credit line increase. Increasing your total available credit automatically lowers your utilization rates as long as you spend the same amount of money every month. Be careful to avoid the “lifestyle creep” of overspending if you do get a credit line increase.
Improve Your Credit Faster
You won’t see results overnight when you’re working to improve your credit score. Think of improving your score the same way as losing weight. You won’t lose ten pounds after a single day or even a week of eating right and exercising. Your credit score works the same way — it takes a pattern of positive habits to see results.
Need a little help boosting your score? MoneyLion can help. The Credit Builder Plus membership is an easy program to follow to help boost your score while getting cash today. Download the app today from the Google Play or Apple App store to get started.
How long will it take to raise my credit score?
70% of Credit Builder Plus users saw an increase of 30 points within 60 days of having their loan. To raise your credit by 200 points, it might take several months of monitoring and building your credit profile. Remember to always pay on time, never max out credit cards, and be patient. Fifteen percent of your credit score is based on the length of time you have had open lines of credit.
Although building credit can be a slow process, having an above average credit score can guarantee you will get better rates on credit cards, mortgages, auto loans, and more.
What are the biggest factors to improve my score?
There are 5 key factors that make up your credit score.
1. Payment history (35%)
2. Credit utilization (30%)
3. Length of your credit history (15%)
4. Credit mix (10%)
5. New credit inquiries (10%)
Why is my score different on different credit bureaus?
Depending on what type of loan you are applying for, the lender has the option to use many different companies that access risk. Some of the most used bureaus are FICO, Experian, TransUnion, and Equifax.
Each bureau assesses your payment history, credit utilization, credit history, credit mix, and inquires at a different weight thus a slight deviation in score from each company.
Lenders also have the choice to report to their preferred credit bureau(s) which can affect your credit score either positively or negatively.