What Is the Best Way to Increase a FICO Score?

FICO is short for Fair Isaac Corp. All three credit bureaus, including Equifax, TransUnion and Experian, use the FICO scoring method for determining a credit score. A FICO score ranges between 300 and 850. A higher credit score indicates stronger creditworthiness, opening the door to lower interest rates and more financing opportunities. If you want to increase your FICO score, focus on improving the several different components that make up the score.

Instructions

1

Make credit obligation payments on time. Payment history is the largest category of the FICO score, making up 35 percent of the total score. If you have accounts that are delinquent or facing collection activity, your FICO score will experience a substantial drop.

2

Pay down revolving debt. The debt category accounts for 30 percent of the FICO score. Revolving debt (such as credit cards) has the largest impact on the category.

3

Keep older accounts open. Don't close out old accounts after making the last payment. Credit history makes up 15 percent of the FICO score. Keeping these accounts open with a zero balance will increase the score.

4

Apply for credit slowly. Opening several accounts within a short period of time will negatively affect the FICO score. This category accounts for 10 percent of the score. Instead, open credit slowly, and only when necessary.

5

Use different types of credit. A higher FICO score is given to consumers who use installment loans (cars, mortgages and personal loans) and revolving credit (credit cards and equity lines). Credit bureaus want to see consumers act responsibly with both types of credit. This makes up 10 percent of the score.