Want to Increase your Credit Score By 200 Points? Here’s What You Need to Do

Chang Fu
September 21, 2020

Let’s get this straight - we’re not promising you can increase your score by 200 points with these strategies (especially if you already have a 700 score, that’s impossible!). Still, we’ve put together an extensive summary that gives you the toolkit and knowledge you need to achieve a 200 point gain.

Before we discuss how you can boost your credit score by 200 points, let’s refresh how a credit score, such as the FICO score, is calculated. There’s definitely some secret sauce to the exact calculations, but the makeup of a FICO score is public knowledge.

What makes up a credit score?

So, what are the factors that impact your FICO score? For this article, we’ll focus on FICO Score 8, one of the most common formulas used by lenders and credit card companies.

Payment history (35%)

Your payment history on loans, credit cards, and even rent make up 35% of your FICO score. You’ll want to be sure that you can make your payments on time.

Credit utilization (30%)

The second most important factor in your FICO Score, at 30%, is how much of your available credit you’re using.

Length of credit history (15%)

Creditors want to know the average age of all of your credit accounts, the age of your oldest and newest accounts, and when you last used your accounts.

Credit Mix (10%)

There are different types of credit such as revolving (credit cards, lines of credit) and installment (mortgage, persona loans); creditors like to see that you’ve demonstrated an ability to manage different types of credit accounts.

New credit (10%)

Every time you open a new credit account, it shows up on your credit report. Opening too many new accounts over a short period may mean that you’re risky.

Now that you know the factors that make up a FICO score, it’s important to realize that your credit profile is unique, and creditors may look at other factors like income and your full credit report before deciding on your credit-related application.

What’s considered an excellent credit score and what’s considered a poor credit score

How do I know my score is good or bad? Lenders and even credit bureaus all have different definitions of what’s good and what’s bad. Experian published a breakdown of different credit score ranges, which we’ll summarize below.

Very poor (300 - 579)

Applicants in this score range may be denied on most credit products. A Possible loan is an option (since no credit score is needed) as are traditional payday loans, title loans, and pawnshop loans.

Poor (580-669)

At this credit score range, you may qualify for certain secured credit cards and higher APR personal loans as well as get varios offers targeting lower credit scores. Certain mortgages and auto loans also become available to you.

Good (670-739)

Once your credit score is at 700, you qualify for most credit products, even if you might not always get the best rate. The average FICO score, according to CNBC, was 703 in 2019.

Very Good (740-799)

You’ll get better than average rates for credit products at this credit score range and you’ll have no issues qualifying for auto loans, mortgages, credit cards, or personal loans.

Exceptional (800-850)

You’ll get the top rates from lenders, and less than 20% of people fall in this credit score category.

Since credit score ranges from 300 to 850, you obviously can’t boost your credit score by 200 points if you’re already at 700. The credit score improvement strategies we’ll go over will focus on boosting your credit score from a low starting point, like 450. It’s important to realize that strategies will change depending on your credit profile, and there’s no one size fits all.

How long does it take to increase your credit score by 200 points?

We hate to do this to you, but the answer to the question is “it depends.” It depends on your credit profile, your credit history, and on your starting credit score.

For example, suppose your credit score is 400 currently and you’re struggling on all the factors that make up the FICO score (payment history, credit utilization ratio, credit history, etc.). In that case, you have a good chance to improve it significantly, even 200 points, in several years.

However, if your credit score is already 600 and you’ve got a solid payment history, but you lack in other areas, it could take you as much as 5 or 10 years to get to the 800 you’re looking for.

Like weightlifting or sprinting, you’ll see the biggest gains, even a 100 point gain in a few months, when you first start, but things will surely plateau. But don’t give up and keep on working to get all the factors that make up your FICO store in a good state. We recommend keeping track of your credit score progress using an app like Credit Karma or Credit Sesame.

How to increase your credit score by 200 points?

Below are 11 ways to build credit history and give you the best chance to increase your credit score significantly. Remember to use these strategies in the context of what credit score factor you are trying to boost or improve. We’ve labeled what credit score factor each of these products and services might influence!

Possible or other installment loans

A Possible loan is a short-term installment loan in which you can borrow up to $500 in minutes and build credit through on-time payments. Like a credit builder loan, the loan has a length of several months. Your payment history is reported to all three major credit bureaus: Experian, TransUnion, and Equifax. The best part? If you can’t make a payment, just flexibly reschedule up to 29 days later within the app. You’ll still be able to show on-time payments on your credit report.

When you apply, your current credit score won’t be checked so it’ll be much easier to qualify for than a personal loan, mortgage, auto loan, etc. You also won’t get a hard inquiry, which would negatively impact your credit report’s “New Credit” factor.

Likely Impact on FICO Score

  • Payment History
  • Credit Mix

Self or other credit builder loans

Self, similar to other credit-building loans like the Possible loan, builds credit history through installment payments. However, instead of getting money and building credit, Self is a tool to save money and build credit at the same time.

With Self, you pay into a credit builder loan that’s locked away until the end of your loan term. Monthly installment payments for a credit builder loan are reported to all 3 credit bureaus and allow customers to build credit history over the loan span, which can be up to two years. At the end of the term, customers can get the money they saved back along with a small amount of interest. The only cost? An upfront administrative fee and an APR lower than most credit cards.

Likely impact on FICO score

  • Payment History
  • Credit Mix

Secured credit cards

A secured credit card requires you to provide a cash security deposit, usually equal to the credit card’s credit line. The card (such as a major bank like Bank of America, Chase, or Capital One) holds the deposit if you can’t pay your credit card bill. You would get your deposit back when you upgrade to a regular “unsecured” credit card or close the account in good standing.

Secured credit cards are easier to qualify for than normal credit cards because of the customer’s cash deposit. Therefore, you can have bad or no credit and can still qualify. However, not everyone has the money for the downpayment of a secured credit.

Likely impact on FICO score

  • Payment History
  • Credit Mix
  • Credit Utilization Ratio

Dispute credit report errors

Under the Fair Credit Reporting Act (FCRA), both the credit reporting company and the creditor are responsible for correcting inaccurate or incomplete information on your credit report. Therefore, if you believe you have errors on your credit report or if there’s payment information or credit lines that are missing, don’t be afraid to dispute.

You can dispute credit report errors directly with the respective credit bureau: TransUnion, Equifax, and Experian. Many apps like Credit Karma and Credit Sesame may also allow you to file a dispute directly within the app when you see a credit reporting error. In addition, credit repair apps like Lexington Law can help you follow your credit progress, protect your credit, and dispute issues as they come up.

Likely impact on FICO score

  • Payment History

Reporting rent and other payments

You can have your utility, subscription, and phone payments reported to the credit bureaus as well. According to Experian, those who use Experian Boost to provide utility, subscription, and phone payments to the credit bureaus increase their FICO score by 13 points. Experian Boost and other payment reporters can be downloaded directly from the app store.

In addition, rent payments can also be reported, depending on your landlord and other specifics. Rental Kharma, Rent Bureau, and LevelCredit are a few services that help report rent payments for a fee. Remember, you’ll need to identify rent payments on your bank account or card to allow for a credit tradeline to be created. If you move extremely often, like every several months, it might be too much hassle to report rent consistently.

Likely impact on FICO score

  • Payment History
  • Credit Mix
  • Length of Credit History

Ask for higher credit limits

A higher limit on your credit cards will reduce your credit utilization rate as long as you don’t immediately spend up to the higher limit. Sometimes, lenders or credit card issuers will automatically increase your line of credit or credit card but other times, you’ll need to ask. Be careful - requesting a higher credit limit can result in a hard credit inquiry on your report. If you’ve had a few hard inquiries on your report recently, asking for a higher credit limit has the potential to hurt your score as well.

For example, you have a $1,000 limit on your current credit card and you have a $500 balance. Your current credit utilization on your credit card is 50%. If you successfully increase the limit on your credit card to $2,000 and still have a $500 credit card balance, your credit utilization on your credit card is now 25%. Although this example is for just one card, remember that credit utilization is calculated across all your credit card debt.

Likely impact on FICO score

  • Credit Utilization Ratio
  • New credit

Keep old credit cards open if possible

Closed accounts in good standing drop off your credit report after 10 years. Therefore, if you have a credit card that you have been active on and you decide to close the credit card, you’ll lose its impact on your credit score in 10 years. In addition, if you have a large credit limit on this card, by closing it, you’ll increase your credit utilization if you don’t open another credit card with the same credit limit.

It’s important to evaluate the costs and benefits to keeping an old credit card open. If you have to pay maintenance or other fees on the old credit card that you don’t use, it might not be worth it! But if the fee is extremely low and you need the boost on your credit score, maybe you should keep your old credit card open.

Likely impact on FICO score

  • Payment History
  • Length of Credit History
  • Credit Utilization Ratio

Become an authorized user on a credit card

An authorized user on a credit card is someone who has permission to use the credit card but is not responsible for making a monthly payment. Becoming an authorized user on someone else’s credit card can help you establish and build credit history. If you have a family member or a friend who’s willing to add you as an authorized user, that can benefit your credit, even if you don’t have a copy of their credit card. Be sure to check with the credit card provider whether they report credit for authorized users to the credit bureaus.

Also remember that the family member or friend will still need to make their payments on the credit card on-time and as usual. Otherwise, you won’t get the positive benefits of building good credit history. If the credit card account becomes delinquent, credit bureaus like Experian can remove the credit tradeline from your credit report to prevent you from having a negative credit reference.

Likely impact on FICO score

  • Payment History
  • Credit Utilization Ratio
  • Credit Mix

Make more frequent payments on revolving debt

Credit card issues and creditors tend to report payments to the credit bureaus monthly. Therefore, if you make “micropayments” during the month on your credit card or outstanding debt on a line of credit, you’ll increase the odds you show a lower balance on your debt and decrease your credit utilization rate. There’s other benefits too such as lower total interest rate and perhaps better alignment between your paychecks and your debt payments.

In terms of improving your credit score though, the bump is likely minor and unlike other methods of building credit such as the Possible loan or credit building loan, once you get the initial bump, that’s probably it. It’s unlikely you’ll continue to see increases in your credit score due to making more frequent payments in the future.

Likely impact on FICO score

  • Credit Utilization

Revolving line of credit using your debit card

Grain and similar companies like it can give you a revolving line of credit to you that’s tied to your bank account and your debit card. You’ll have a credit limit like a normal revolving line of credit with a bank but that credit limit will be based on the income and cash flow these companies see in your linked bank account. Once linked and approved for a credit limit, you can spend as normal on your debit card and Grain and these companies will advance you cash up to a certain limit directly into your bank account while you’re spending on your debit card.

This line of credit (LoC) on your debit card is useful if you have difficulty qualifying for a normal credit card and you’re lacking cash on hand to use a secured credit card. Just make sure you have OK cashflow and you’re making an income, because that’s how they approve you. If you only have installment loan payment history in the past, getting some line of credit payment history and diversifying your credit mix could be beneficial on your journey to raising your credit score by 200 points!

Likely impact on FICO score

  • Payment History
  • Credit Utilization
  • Credit Mix

Other loans (student, mortgage, auto, etc.)

Loans such as student loans, mortgages, auto loans, and more can all build credit. But unfortunately for many people, a mortgage or auto loan is exactly what we’re working towards and all of these loans (with the exception of student loans) likely have a credit score minimum or stringent requirements.

Student loans, mortgages, and auto loans are all various types of installment loans, usually with monthly payments and lasting multiple years.

Likely impact on FICO score

  • Payment History
  • Credit Mix
  • Length of Credit History

Summary

Improving your credit is a long journey, full of ups and downs, but don’t give up! With patience, the right help, and by following your action plan, it’s possible and you can raise your score by as much as 200 points or more. Just remember, there’s a variety of different products and services like Possible that can assist you on that journey and you’ll want to understand all of them in detail and test more than a few before you figure out the best ones to get you there. Best of luck!

Chang Fu

Chang is an avid writer, among other things, at Possible. He grew up loving reading and writing, creating his own poems and even a book he's now hidden in an old closet, unpublished. His financial experience at a large bank along with his passion for technology to help underserved communities inspires him to write for Possible.

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