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Improve Your Credit Score Faster: Tips You Should Know

By Motley Fool Staff - Apr 4, 2017 at 7:06PM

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Get a full rundown of how to improve your credit score and why doing so matters.

The average American's FICO credit score hit an all-time high of 699 in 2016. 

While the upward trend is encouraging, a score above 700 is widely considered to represent a "good" credit history. So the unfortunate truth is that the majority of Americans don't have good credit.

Woman holding credit card and a smartphone.

Image source: Getty Images

Why does having good credit matter? People with good or better credit can more easily reach their financial goals.

For starters, they qualify for the lowest mortgage rates. The mortgages rates offered to those with excellent credit scores can be up to 1.5 percentage points lower than the rates offered to borrowers with poor credit. For an average homebuyer, that difference would translate to savings of $102,000*.

A high credit score also helps consumers land the most lucrative credit card offers, from big credit card sign-up bonuses to balance-transfer credit cards that can help pay off debt faster during the 0% introductory APR period.

Clearly, it pays to improve your credit score, and doing so is a long-term investment in your financial security that can help you get ahead of your bills faster or save more money to invest for retirement.

FICO credit score basics

Chances are, if you're looking to borrow money, banks will put your FICO score under the magnifying glass.

The factors of your FICO score can be broken down into five categories and are weighted as follows:

  • Payment history: 35%
  • Credit utilization: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

With this all in mind, we've compiled a handful of some of our most valuable credit-score articles and videos, which can help put you on the path to improving your credit score. The following articles focus on simple, actionable steps you can take to increase your credit score. They also highlight credit cards that might be a good fit for you.

*Average new home purchase of $309,000. Current 30-year fixed mortgage rate of 4.31% versus 5.81%. Mortgage rates as of March, 2017. The Motley Fool has a disclosure policy.

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