Credit Score Series - Part 4: Improving Your Credit Score

In this installment of the FinanciFI Credit Score Series, we move from building to improving. If you already have a credit score but want to make it stronger, this guide walks you through simple, proven steps that lead to long-term results.

(New here? Start from the beginning with “Understanding the FICO® Credit Score” here.)

Improving Your Credit Score: Small Habits, Big Results

Over the past few articles, I’ve covered what a FICO® credit score is, how it’s calculated, and how to start building credit from scratch.

Now let’s talk about the next step: improving your credit score once you already have one.

Whether your score is 580 or 750, there’s always room to strengthen it. The great news? Most of the steps that build credit also improve it. It just takes focus, consistency, and time.

Let’s walk through some of the most effective ways to raise your score and keep it there.

1. Make Every Payment on Time

If you remember only one thing from this post, let it be this: On-time payments are the single most important factor in your credit score.

Payment history makes up 35% of your FICO® score, which makes it the largest portion. Even one late payment (especially if it’s 30 days or more past due) can have a noticeable impact, and missed payments can stay on your credit report for up to seven years.

Here’s the good news: You can prevent almost all late payments with a little organization and automation.

Practical Tips:

• Use autopay for bills that are the same amount every month- like rent, utilities, and loan payments.

• Set reminders or calendar alerts for variable bills, such as credit cards or medical payments.

• Schedule payments right after payday so the money is already earmarked before it can be spent elsewhere.

• Review your budget monthly to make sure you’re not overcommitting and risking missed payments.

Creating a system that fits your lifestyle ensures you’re never caught off guard… and your credit score will reward you for it.

💡 FinanciFI Tip: Set up autopay for at least the minimum payment on each credit card. You can always pay more later, but you’ll never be late.

2. Manage Your Credit Utilization

The next biggest factor in your FICO® score, Amounts Owed (30%), comes down largely to your credit utilization ratio. That’s a fancy way of saying, “How much of your available credit are you actually using?”

If your total credit limit across all cards is $10,000 and your current balances total $3,000, your utilization is 30%. That’s the upper edge of what’s considered “good.” Experts generally recommend staying between 10% and 30% utilization. Below 10% is even better, but 0% (never using credit, or using a credit card and paying it off immediately- before the usage is report to the credit bureaus) can backfire, since lenders want to see that you’re using credit responsibly.

Practical Tips:

• Pay down balances strategically. Focus first on the cards with the highest utilization.

• Ask for credit limit increases, if you can handle the temptation responsibly.

• Avoid closing old credit cards unless absolutely necessary; keeping them open helps lower your utilization ratio.

• Pay before your statement date. Some credit card companies report your balance as of the statement date, not your due date. Paying a portion of your bill before the billing cycles closes can make your reported balance (and utilization) lower.

3. Check Your Credit Reports Regularly

Even if you make every payment on time and keep balances low, your credit score can still be affected by something out of your control… errors on your credit reports.

There are three major credit bureaus in the U.S.:

• Equifax

• Experian

• TransUnion

Each bureau may receive slightly different data from your creditors, so it’s important to check all three reports for accuracy.

You can access them for free at www.annualcreditreport.com, which is the only site authorized by federal law for your free reports. (Use caution on other sites, as these might be scams phishing for your personal information.) While the law authorizes everyone to one free report from each bureau each year, the three major bureaus now allow everyone to pull free reports each week.

What to Look For:

• Late payments you know were on time

• Accounts you don’t recognize

• Incorrect balances or limits

• Duplicated accounts or outdated information

If you find something wrong, you have the right to dispute it with the bureau. They must investigate and respond within 30 days. Correcting inaccurate negative information can sometimes improve your score quickly.

💡 FinanciFI Tip: After fixing errors, pull your reports again to verify the corrections went through. Going forward, check each bureau’s report at least annually to stay on top of potential identity theft or reporting mistakes.

4. Be Careful with New Credit

Opening new accounts can impact your score in several ways:

• Each hard inquiry (credit check) can temporarily lower your score a few points.

• A new account shortens your average account age (hurting your Length of Credit History score).

• New debt affects your utilization ratio.

That doesn’t mean you should never open new accounts. If you’re strategic, new credit can actually help you long-term, especially if it increases your total available credit or diversifies your credit mix. When possible, avoid opening several new accounts in a short period because that can signal financial distress to lenders.

Rule of thumb: Space out new credit applications by at least six months and only apply when it serves a clear purpose (like refinancing or consolidating debt at a better rate).

Real-Life Example

When our family returned to the U.S. from an overseas tour, we bought a car using a $25,000 loan. Because installment loans start at 100% utilization, the new credit line increased our “Amounts Owed.” But we also had over $60,000 in total credit card limits. With only about $3,000 in card balances, our total credit utilization was: $28,000 ÷ $85,000 = 32.9%

Slightly above the ideal range, but not overly harmful. And since that new car loan added an installment account to our report, our Credit Mix (10% of the FICO® score) actually improved.

This is a good example of how one action can have both positive and negative effects- and why your credit score can fluctuate even when you’re doing everything right.

💡 FinanciFI Tip: Don’t panic over small score changes month to month. Focus on the trend over time. Consistency matters far more than perfection.

Which leads me to my last point...

5. Be Patient and Consistent

This may be the hardest part of improving your credit score- it takes time. Credit scores reflect your long-term habits, not quick fixes. Positive patterns- like paying on time, reducing balances, and keeping old accounts open- build momentum over time. Even small improvements each month can add up to major progress within a year.

Think of your credit score like your financial reputation. It can’t be built overnight, but steady, consistent behavior earns trust over time.

Bonus Tip: Don’t Obsess Over Every Point

Your credit score isn’t a static number; it fluctuates constantly based on when creditors report balances and payments. Fluctuations from month to month are completely normal.

Instead of checking your score obsessively, focus on what you can control:

• Are you paying on time?

• Are you keeping your balances low?

• Are your reports accurate?

If you can say yes to all three, you’re doing the big things right.

In Summary

To recap, here are the best ways to improve your credit score:

• Pay every bill on time

• Keep utilization below 30% (and ideally below 10%)

• Review your credit reports regularly

• Avoid opening too many new accounts too quickly

• Be patient- good credit is built over time

These habits might sound simple, but they have incredible power when practiced consistently. Small, steady progress will move you closer to the high 700s (or even 800+) sooner than you think.

Ready to Strengthen Your Credit with Confidence?

Understanding what impacts your credit score is just the start. Putting it all together in a plan that fits your lifestyle is where the real transformation happens.

If you’re ready to feel confident about your credit- and finally see those numbers move in the right direction- schedule a free Q&A Call to learn about how financial coaching can help you achieve your financial goals. Or jump straight into a Discovery Call, and we’ll look at your credit reports together, identify what’s working and what’s not, and make a simple, realistic plan to strengthen your financial foundation- one step at a time.