FICO Scores Just Reached an All-Time High. Here's How to Boost Yours

by Maurie Backman | Updated Aug. 28, 2022 - First published on Oct. 2, 2019

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The higher your credit score, the better. Here's how you can bring that number up.

The higher your credit score, the easier it becomes to borrow money -- and to do so affordably. Thankfully, Americans seem to be doing a good job of raising their credit scores. 

For the first time, the average American's credit score has reached 706, according to FICO, the standard model for calculating credit scores. That's high enough to be considered "good," according to Experian.

As a refresher, your credit score can be as low as 300 or as high as 850. Perfect credit is hard to come by, but once your score reaches the mid-700s, your chances of getting approved for a loan or financing are strong. And a score of 706 will yield similar results, though you may not get the same low rates as those whose credit scores are 50–100 points higher.

Still, a 706, or something in that ballpark, is a solid credit score to aim for, especially if yours isn't great at present. If you want to join the ranks of those Americans with good credit, here are a few key moves to make. 

1. Pay all of your bills on time

Of the factors that determine your credit score, your payment history carries the most weight. It speaks to how good a job you do of paying your bills in a timely fashion. If you want to see your score improve, pledge to never be late.

Keep in mind that making a minimum payment by its due date counts as an on-time payment. Even if you can't pay your balance in full.

If you've struggled with lateness in the past due to absent-mindedness, avoid that problem in the future by setting up automatic payments. You can also comb through your previous bills, note their due dates, and put them on an electronic calendar that sends you payment reminders. 

2. Pay off a chunk of your existing debt

Aside from your payment history, your credit utilization is the next most important factor in calculating your credit score. Utilization refers to the amount of credit you're using at once, and that number should be kept at 30% or below to raise your score.

This means that if you have a total credit limit of $10,000, you shouldn't have more than $3,000 in outstanding balances at once. 

If your credit utilization is above 30%, paying off some existing debt will help bring that number down, thereby raising your score. To scrounge up that extra cash, you can try cutting back on expenses in your budget, getting a temporary second job to boost your income, or taking inventory at home and selling items you no longer want or need. 

3. Check your credit report for errors

Black marks on your credit report could bring down your credit score. Sometimes that negative information is there for a reason -- say, you racked up debt on a credit card or fell behind on your loan payments. But sometimes that negative information is there as the result of an error.

Errors on credit reports are fairly common -- more than 20% of reports have at least one. Identifying and correcting mistakes on your credit report could boost your score.

You're entitled to a free copy of your credit report every year from each of the three major reporting bureaus (Equifax, Experian, and TransUnion). You can review that information without actually spending a dime.

Whether you're applying for a personal loan, a mortgage, or a new credit card, the higher your credit score, the greater your chances of getting approved and snagging a favorable interest rate.

Follow these steps to raise your credit score, and with any luck, yours just might surpass that of the average American.

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