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Improving Your Credit Score: Steps You Can Take

| October 6, 2014

One of the most common questions we hear at Morgan & Morgan, especially for people coming out of bankruptcy, is “What can I do to improve my credit score?” First, let’s examine what determines a credit score. All of your debts, payments, credit card accounts, and other financial history are used to compute your FICO credit score. All of the credit agencies calculate a score between 300 (extremely poor creditworthiness) and 850 (perfect credit). The average score is about 700. Your credit score is used by creditors to make a decision on applications for car loans, mortgages, credit cards, and other purchases.  If credit is granted, your score is often used to determine the interest rate on the debt.

While there is no one-size fits all solution, there are things you can do to raise your credit score:

About 35%, of your score is determined by payment history. It is extremely important to pay all of your bills on time. Payment history makes up the largest percentage of your credit score. Missing payments or frequently paying bills late will drastically lower your score. You can significantly improve your score by making timely payments going forward, even if you have a history of late or missed payments.

About 30% of the FICO score is based on how much money you owe versus how much credit is available to you. This represents the second largest portion of your credit score. For this reason, it is rarely helpful to cancel credit cards that have a zero balance.  A better strategy is to keep the card, but use it carefully and make all payments on time. This also means that your accounts with higher balances should be paid down as much as possible.

About 15% of your credit score is based on the length of your credit history. The longer your credit history the better.

The type of credit you use determines about 10% of the FICO score. Having many different types of credit, including mortgages, credit cards, car loans, etc. will likely generate a higher score.

About 10% of your FICO score includes searches for credit. Applying for many different types of credit over a short period of time can actually lower your score.

You should check the accuracy of your credit report at least once per year, by using a FREE service such as If you notice any errors in your credit report, take the necessary steps to correct the problem immediately. Errors in your credit report can lower your credit score significantly.

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