Five Hacks to Improve Your Credit Score

ELIZABETH S. | May 2, 2024

When was the last time you checked your credit score? If you are like most people, it has probably been some time. However, our credit scores play a significant factor in our lives—they give us access to financial products and help us in applying for loans at lower interest rates and with better terms. It can help us get into the home of our dreams. Our credit score can also be a fundamental factor in our ability to purchase a car. That’s why knowing what it is is so important.

Using the FICO scoring model, your credit score falls between 300 and 850. And while it is true that the higher your score, the better, ultimately, you want to ensure your score remains over 700 at all times. If it is lower than that, thankfully, there are some things you can do to boost it in the right direction.

Magnifying glass atop excellent credit scores

What is a Credit Score and How Does it Work?

As we shared above, your credit score sits somewhere in the range of 300 to 850. You start building a credit score typically once you are 18 and have applied for a student loan, auto loan, or your first credit card. If you never apply or use credit, then you won’t have a credit score. 

Your credit score is calculated based on a set of consumer behaviors. And, each factor has a weight associated with it, which means that some factors are more significant than others as far as their impact to your score.

Those five factors are: 

  • Payment history (35%): This looks at how well you make your payments. To grow your credit score, you need to make sure you make at least your minimum monthly payments on time, every month.
  • Amount owed (30%): This factor is also commonly referred to as utilization. Basically, it means that if you have a credit limit of $10,000 on your credit card, you should keep your balance at 30% or less—aka $3,000. Coincidentally, this factor represents 30% of the weight of your credit score.
  • Length of credit history (15%): Your credit score can get higher and higher over time, the longer you have a credit history. Years of positive financial behavior can help your score to grow in the right direction.
  • New credit (10%): Applying for new credit periodically can actually be good for your credit score. Creditors want to see that you have the ability to manage multiple credit products. However, just because having new credit is good, too much new credit is not so good.
  • Credit mix (10%): Creditors like to see that you have a mix of credit products. For example, this might include a student loan, auto loan, and a credit card. Too many types of credit in one category can hurt your credit score.

What Can Damage Your Credit Score?

Knowing how your score is calculated is the first step in adopting healthy behaviors that will help you achieve a good or better score. But also, it is important to know what can damage your credit score. 

Engaging in financial behaviors such as making payments late, having too much debt, fraudulent activity on your account that has been mismanaged, and even credit checks can send your score plummeting. Of course, we understand that that last one might be a bit of a head-scratcher, especially when we said earlier that new credit is weighted at 10% of your credit score. The key here is to be thoughtful about how you apply for credit. Most financial experts agree that you should wait at least six months between credit applications.

And finally, understand that if you don’t have credit, you can’t get a credit score. We suggest seeking out opportunities to help you establish that credit history. For example, become a co-signer on a trusted family member or friend’s credit card. Or, ask a parent or other family member to co-sign a car loan for you. This strategy can help you establish credit safely.

A couple celebrating their improved credit score

Five Hacks to Improve Your Credit Score 

If your credit score doesn’t fall in the good range—at least 670 or higher—you have some work to do. Here are some tried and true tactics to help you get that credit score where it needs to be.

Always Make On-Time Payments Even If Not for Full Balance

Ensuring timely payments is a must for a healthy credit score. While paying the full amount is ideal, making at least the minimum payment on time every month prevents late fees and negative marks on your credit report. Regular payments demonstrate reliability to lenders, gradually improving your credit standing.

Open Additional Lines of Credit That You Can Afford

Opening new credit lines can positively impact your score by improving your credit mix and utilization ratio. However, it's essential only to take on credit that you can manage comfortably. Successfully handling multiple types of credit shows creditors that you are a responsible borrower, which can enhance your credit profile.

Focus Payments Around Your Credit Reporting Date

Timing your payments to just before your credit reporting date—around the middle of the month—can significantly improve your credit utilization ratio. By paying down balances right before your usage is reported, you present a better image of your financial management, which can boost your score.

Avoid Unnecessary Credit Inquiries

Each time your credit is checked, it can slightly lower your score. To avoid this, ask if companies can perform a pre-approval or a soft inquiry, which doesn't affect your score, before proceeding with a full credit pull. This approach helps maintain your current score while you shop for new credit options.

Apply for Short-Term Loans to Pay Down Credit Debt and Avoid Lateness

Taking out short-term loans can be a strategic move to manage or consolidate debts and avoid missed payments. Using these loans to cover or reduce existing balances, you can keep your account in good standing, avoid late payments, and potentially lower credit utilization, all of which can help improve your credit score. Cash Store offers both cash advance loans and installment loans that can help with this very purpose.

Take Steps to Improve Your Credit Score Today

Once you adopt healthy financial habits such as establishing a budget, living within your means, paying your bills on time, etc., your credit score will grow. That said, be sure to check it periodically with one of the credit bureaus—Experian, Equifax, or TransUnion—and check your credit report at least once yearly. If you have a credit card, check to see if your credit card issuer has a program to give you access to your score or report. 

Need help with a short-term loan? Get started today with your pre-qualification application at Cash Store. 

The content on this page provides general consumer information or tips. It is not financial advice or guidance. Each person’s circumstances are unique. The Cash Store may update this information periodically. This information may also include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs. 

More Articles

What is an APR Rate, and How is it Calculated?

APR rates are an essential part of applying for loans. Learn what an APR rate is and how it’s calculated in this beginner’s guide.

Read More >

Why Do Loans Have Different Payback Periods

When shopping for loans, you might be surprised at how different loan payback periods are. Learn why loans have different payback periods here.

Read More >

Working With Direct Lenders When You Have Bad Credit - What to Know

Bad credit can make accessing loans or other funding difficult, but not impossible. Learn tips to working with direct lenders with bad credit in this guide.

Read More >

Trusted provider of cash loans since 1996

1-888-950-2274

Connect With Us

Loan Amount is subject to loan approval. Loan terms and availability may vary by location.  Approval rate based on complete applications received across all Cash Store locations. Customers can typically expect to receive loan proceeds in less than 20 minutes; however, processing times may vary. Loans / Advances are provided based on approved credit. Each applicant for credit is evaluated for creditworthiness. Vehicle is subject to evaluation for title/auto equity loans.

Please see the Licenses and Rates page for additional product details.

Cottonwood Financial offers consumer credit products that are generally short-term in nature and not intended for long-term borrowing needs.

In Texas, Cash Store is a Credit Services Organization and Credit Access Business. Loans are provided by a non-affiliated third-party lender. Please see the Licenses and Rates page for links to Consumer Disclosures and choose the one for the product and amount that most closely relates to your loan request.

Customer Portal residency restrictions apply. Availability of funds may vary by financial institution.