credit score calculation

9 Easy Ways to Increase Credit Score Fast for Millennials

Basics, Financial Education, Pay Off Debt 20 Comments


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Increasing your credit score is not too hard to do once you know the credit score formula and steps to improve your credit score.

Ways To Increase Credit Score

Credit score is another one of those confusing financial concepts. Everyone has a credit score, but not many people actually know how it’s calculated, or how to improve it. Make no mistake, increasing your credit score fast can be tricky, but with the right formula, you can definitely improve your credit score.

In this article, I will discuss what a credit score is, the importance of having good credit, which factors are used in the credit score calculation, and give you 9 actionable steps to improve your credit and increase your credit score.

In addition, I have included some commonly asked questions about credit score at the end of the post.

What is a Credit Score?

A credit score is a number calculated from your credit history. Your credit score is used by lenders to determine your creditworthiness for a mortgage, loan, credit card, etc. Credit scores vary between 300 and 850, with 300 being the lowest credit score and 850 being the highest credit score.

The average credit score in the United States is 687.

The Importance of Having Good Credit

Consider the following situation: you are looking to buy a house and go to the bank for a mortgage loan. The loan officer at the bank types in your information and says, “You have a credit score of 653 and as a result, we will give you a loan at 4%. If your credit score was 700 or higher, we could get you a  loan at 3.75%” While 0.25% doesn’t seem like much, it can add up to A LOT more interest over the time you are paying down the loan.

For a $200,000 30-year mortgage loan, a 0.25% interest rate increase will cost an additional $10,000 in interest over the life of the loan! Below is a table with the total interest paid and total cost of a $200,000 30-year mortgage at various interest rates.

Interest Rate Total Interest Paid Total Cost
3.75% $133,433 $333,433
4.00% $143,739 $343,739
4.25% $154,196 $354,196

One other point is if your credit score is very low (less than 600), some banks and lenders will not even consider extending credit because they believe you are not creditworthy! That being said, you can fix this and increase your credit score.

“A man in debt is so far a slave.” – Ralph Waldo Emerson

Next, let’s talk about the factors that go into determining your credit score, so we can talk about how to use these to your advantage if you’re looking for ways to increase your credit score fast.

Which Factors Determine Your Credit Score?

A person’s credit score is calculated based on a combination of score calculation

There are five main factors that determine your credit score: Payment History (35%), Utilization (30%), Length Of Credit History (15%), New Credit (10%), and Types Of Credit Used (10%).

Payment History (35%)

Payment history looks at if you have made your credit payments on time. Credit reports show the payments submitted for each line of credit, and the reports indicate if the payments were received 30, 60, 90, 120 or more days late.

The best credit quality borrowers have 0 late payments.

Utilization (30%)

Utilization is the ratio of money owed to the amount of credit available. For example, if you have a credit card with a credit limit of $5,000 and you owe $1,000, you have a utilization rate of 20%. An important note here, utilization does not take into consideration loans.

The best credit quality borrowers have a utilization rate lower than 30% of their total credit limit.

Length of Credit History (15%)

As a general rule of thumb, the longer an individual has had credit, the better their score. Credit scores take into account how long the oldest account has been open, the age of the newest account and the overall average.

If you have accounts that have been open for multiple years, you will have a higher credit score. The best credit quality borrowers have a history of 10 years or more.

Credit Mix (10%)

Creditworthy borrowers will generally have a mix of loans and credit lines on their history. These loans and credit lines could be student loans, auto loans, mortgages, credit cards, etc.

A high credit score will have a number of different loans and lines. I have four credit cards and a mortgage, and have had a student loan and an auto loan in the past. The best credit quality borrowers will have at least 15 open accounts.

Applying for New Credit Accounts (10%)

Let’s say you are a bank and you see someone apply for three credit cards and a mortgage in one week. This probably isn’t good sign. The person who applied for those new accounts probably isn’t in a great position financially, otherwise they wouldn’t need to apply for four credit accounts. As a result, the bank views situations like these as risky.

Inquiries for new credit accounts stay on your credit report for two years. After two years, the inquiries no longer show up on a person’s credit report. Generally, the best credit quality borrowers will have less than four inquiries on their credit report.

investing9 Tips to Increase Your Credit Score Fast

Below are nine tips to help boost your credit score! Some of these tips will take a little time before you see an impact, but others you can take action on immediately to help you increase your credit score fast!

1. Review Your Credit Report and Identify Areas of Improvement

What gets measured gets managed. First, go to and request a free credit report from each of the big three credit reporting companies:

  • TransUnion
  • Experian
  • Equifax

By law, you’re entitled to one free credit report each year. After obtaining your report, dive into the details!

Ask yourself the following questions:

  • Do I have any accounts with late payments listed? Are these accounts accurate?
  • Do I have any unpaid bills listed? Is this information accurate?
  • Are there any other mistakes or errors on the report?
  • Which factors need improvement? (Payment history, utilization, credit history, credit mix, opening new accounts)
    • Do you have late payments?
    • Is your utilization rate above 30%?
    • Do you need more credit history?
    • How many different credit accounts do you have?
    • Did you recently open a bunch of new accounts?

Click for more detail on how to check your credit report.

After understanding your current credit situation, you are ready to start improving your credit score! Note: these credit reports will not tell you your credit score for free. If you have a Mint account, you can look at your credit score for free. I’ve found it to be a decent estimation, but slightly lower than real inquiries. You can also see your FICO credit score for free using Discover’s Credit Scorecard tool, which is available to anyone even if you don’t have a Discover card.

2. Correct Any Errors on Your Credit Report

Does your credit report have any errors in your personal information, accounts, or payment history? Are there any missing accounts? Are there any bills which you believe you have paid but the agencies don’t believe you have?

To correct these errors, do the following:

  1. Contact the credit bureau and the organization that provided the information to the credit bureau
    • Both of these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act.
    • The credit bureau must investigate the item(s) in question – usually within 30 days – unless they consider your dispute frivolous. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should:
      • Clearly identify each item in your report you are disputing.
      • State the facts and explain why you are disputing the information.
      • Request deletion or correction.
  2. Follow up with the organization that provided the information to the credit bureau
    • Again, include copies of documents that support your position. Many providers specify an address for disputes. If the provider again reports the same information to a bureau, it must include a notice of your dispute. Request that the provider copy you on correspondence they send to the bureau.
  3. Expect this process to take between 30 and 90 days.

If you know the error is an error, don’t be afraid to dig in. Make sure to keep all documentation and notes on the subject. This woman sued Equifax for $18 million over an error on her credit report!

3. Never Miss a Payment

35% of your credit score calculation is payment history. Keep it simple stupid! Pay your bills on time!

Seriously, this is the biggest component of your credit score. By staying current on all of your accounts, your credit score will go up over time.

credit card pay off4. Keep Your Utilization Rate Below 30%

Your utilization rate makes up 30% of the credit score calculation. Remember, utilization rate is your outstanding balance divided by your credit limit.

If you don’t want to decrease your spending, you can pay down your highest debt, increase your credit limit, or open another line of credit (credit card).

5. Increase Your Credit Limit

Increasing your credit limit will decrease your utilization rate. You can increase your credit limit by calling your credit card company or going in to your bank directly and asking for a credit increase on your credit card or loan. These days many companies make it as easy as requesting a credit increase online right on their website. A good time to do this is when your income has increased – by showing an increase in income, you’re showing that you’re able to theoretically borrow more money responsibly and will more likely be granted the credit limit increase.

Early in 2017, I increased my credit limit $7,500 and saw a 20 point increase in my credit score!

6. Open Another Line of Credit

If you don’t want to increase your credit limit on your current credit lines, you can open another line of credit. There will be a slight hit to your credit score because you are opening a new account, but over time, your credit score will increase because your utilization rate will decrease.

7. Pay Down Your Highest Utilized Account

Paying down your highest utilized account will have a direct impact on your utilization rate. If you have two credit cards, one that is 100% utilized and one that is 10% utilized, the smart move would be paying off the 100% utilized card.

8. Mix it Up

Having a diverse mix of credit accounts shows the credit rating agencies you have a handle on your finances and credit situation. Having a few credit cards, an auto loan, and a mortgage would look much better than only a credit card. That being said, I wouldn’t recommend taking a personal loan out just to build credit… you have to think about interest payments!

9. Stay Consistent

Building your credit will take time (credit history, aka time, is a variable in the credit calculation!) By staying consistent, paying your bills on time, and ensuring errors stay off your credit report, your credit will increase over time.

I’ve been building credit for a few years now. When I started out, my credit score was between 600 and 650. I had a student loan and a credit card. The next year, I bought a house and applied for a mortgage. My credit score was about 680 at that point. The following year, I bought a car and paid off my auto and student loan. Throughout this whole time, I’ve been current on my payments and kept my utilization below 30%. After three years of consistency, my credit score is between 725 and 750.

You can do it! You can improve your credit score!

“A journey of a thousand miles beings with a single step.” – Lao-Tzu

Common Misunderstandings and Questions about Credit Scores

There are a number of common misunderstandings and questions people have about credit score. I will address a few of those misconceptions here.

Am I Building Credit Faster by Keeping a Balance on my Credit Card?

NO. You are not building credit any faster by keeping a balance on your credit card at the end of the month.

If you are keeping a balance on your credit card, this could actually have a negative effect on your credit score (your utilization rate will be higher compared to if you paid it off in full).

PRO TIP: Pay off your credit card in full each month. You aren’t building credit if you have a remaining balance any faster than if you have a $0 balance. In addition, if you have a remaining balance, 20%+ will be tacked on in interest to next month’s outstanding balance.

How will Consolidating Debt Accounts Affect my Credit Score?

It depends on the situation. From a financial standpoint, debt consolidation generally is a good thing. From a credit standpoint, things get a little hairy.

If you have maxed out a few credit cards and you consolidate that debt into an installment loan, your credit score will take a slight hit. Your credit score will decrease because you opened a new account and you have no credit history on that account.  After a few months, your credit score will begin to increase because you will be making payments on time, your utilization rate will be lower, and your credit history will be building through that loan.

From a financial standpoint, consolidating debt is generally beneficial. Credit cards generally have 20%+ interest rates. Debt consolidation can reduce the interest rate. As a result, you will pay much less in interest when paying down your debt.

The Mastermind Within is partnered with various financial institutions who specialize in debt consolidation. To see if debt consolidation would make sense for you, you can click here to get connected with these partners.

 Should I Work with a Credit Repair Agency?

It depends. There are a few situations where working with a credit repair company may make sense:

  • If you have legitimate errors on your credit report and don’t want to fix them yourself
    • The main function of any credit repair service is to remove errors from your credit report. These could range from errors in lender reporting to simple errors in your personal information.
  • If you have errors that can’t be verified
    • A little known fact about your credit report is that every detail in the report needs to be verifiable. If an item cannot be verified, you can get it removed from your report.
  • If your lenders are willing to work with credit repair agencies
    • Some lenders don’t like working with credit repair services. Some lenders aren’t willing to negotiate. However, for the lenders who are willing to listen, this is a good way for credit repair services to raise your score.

A word of caution on working with credit repair agencies: if you choose to work with a credit repair agency, make sure you pick one with a high reputation. In addition, make sure you pay them ONLY after the work is done. There are a number of companies that will ask for payment up front and not get the job done.

Click for some more information on credit repair agencies.

saving moneyWill Closing Accounts have an Effect on My Credit Score?

Yes. If you close a credit card, your overall credit limit will go down and your utilization rate will go up. In addition, your credit mix and credit history will take a hit. If you close a loan account, your credit mix and credit history will take a slight hit.

My recommendation on whether to close an account or not is to think about your goals and financial situation and make sure it makes sense for you.

If you have a student loan and want to be debt free, don’t worry about your credit score. Destroy that debt!

If it’s a credit card, you can make one purchase a month and pay it off at the end of the month. I have two credit cards that I spend about $25 a month on just to keep the credit history building. In this case, I wouldn’t recommend closing the account.

Start Improving your Credit Score Today!

With the tips above, you will be on your way to a higher credit score fast. Remember: never miss a payment, keep your utilization rate below 30% and have a diverse mix of credit accounts. Over time, your credit score WILL increase.

Lastly, make sure to pay off your credit cards in full each month, and be careful when working with credit repair agencies.

“The most difficult thing is the decision to act, the rest is merely tenacity.” – Amelia Earhart

Which steps have made the biggest impact on your credit score? Did I miss any critical points?


Ways to Quickly and Easily Increase Your Credit Score

How to raise your credit score. Increasing credit score. Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score.

How to raise your credit score. Increasing credit score. Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score.

Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score.

Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score.

How to raise your credit score. Increasing credit score. Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score. What makes up a credit score. Credit score secrets.

How to raise your credit score. Increasing credit score. Easy ways to increase credit score. What is a credit score. Increase credit score. Nine ways to increase credit score. What makes up a credit score. Credit score secrets.

Ways to Quickly and Easily Increase Your Credit Score

Ways To Increase Credit Score
Ways To Increase Credit Score
About the Author

Hi! I'm Erik, the creator of The Mastermind Within blog.

I'm passionate about helping you improve as a person, get better with your finances, and create your dream life over time.

Through setting goals, critical thinking and intentional living and action, I believe you can master your life, win with money, and get on the path to freedom.

Get your free goals guide below, or browse through the 6 portal pages after the guide form.

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Comments 20

  1. Good list here, Erik. Something every graduating high school graduate should know and understand. I’ve noticed, as you mention in #8, having the right mix of credit (both installment loans as well as credit cards) as being beneficial to credit scores. Timely payments is a must and balance payoff of credit cards every month really helps too.

    1. Post

      Thanks Amy – I appreciate the comment and completely agree that high schools should be taught these concepts.

      Timely payments is a must! It’s 35% of the score!

  2. I have hear individuals that are debt-free and they don’t have payment histories, it actually lowers their credit score. So sometimes having no debt is bad for your credit score.

    Overall, great tips Erik. I love the combination of the debt destruction tool and the credit score improve the tips. Together, these two tools can save people thousands.

    1. Post

      Hey Leo, I agree with you if an individual is debt-free and never has had debt in their past. But if someone becomes debt-free, their score will probably go up a little bit.

      Thanks for the comment – I’m glad to provide this information to others! 🙂

      1. Doh noticed my previous reply went as a new comment. From experimentation, I’ve noticed taking out a new loan increases your score because your credit line increases but immediately goes down more because your credit utilization also increased and weighs heavier. My credit score is usually the highest when I have no loans at all. It takes a bit of a dip right after you pay off an installment loan because your line of credit decreases but the dip is very small compared to taking out a loan and increasing your credit utilization

  3. Love that Ralph Waldo Emerson quote. When we consolidated our debt with SoFi and our utilization rate dipped, our credit score shot up immediately. Like, by 50 points. The credit utilization ratio is a huge one to know and keep in check. Nice, thorough article Erik!

    1. Post

      That’s awesome for your Laurie – very happy for ya! 50 points is an awesome increase AND I bet you decreased your monthly payment! Congrats!

  4. Interesting fact, I recently bought several plane tickets on my credit card for family members and it pushed my credit utilization up to 2.8%. My utilization is usually below 1%. I noticed on credit karma that equity fax and transunion rounded up to 3% and dropped my credit scores by 12 and 11 points. It went back up after payment but I didn’t imagine a 3% utilization would affect my score that much.

    1. Post

      Wow. a 2% increase in utilization impacting your scores by 10 points?? Maybe I should go back to using debit cards! 😉

      Credit score is a crazy animal. Thanks for stopping by Stuart.

  5. Awesome list!!!

    I saw my credit score jump by 10 points when I asked my credit card company to increase my credit card limit. Not that it matters but I’d love to get an 850 credit score one day 🙂

    1. Post
    1. Post

      I’m guessing this is in response to Leo’s comment. The decrease was probably due to opening a new account… again, credit score is silly.

  6. “Never Miss a Payment” This is SO important and SO easy to do. My payments are automated, and the ones that aren’t are triggered by a calendar reminder. I want to give myself no excuse for paying something late. Creditors are quick to catch late payments and the larger the payment, the larger the late fee and the more damage to your credit.

    1. Post

      Nice one SMM – I agree, so important, yet so easy!

      I have all of my payments automated and keep an eye on my bank balances + credit balances to ensure they are in good standing.

      Thanks for stopping by! 🙂

  7. Nice overview, Erik! For me, steady payments and a “payoff” of a mortgage really boosted my score. I say “payoff” because it was just a refi, but the credit agencies see that transaction as a completion of debt service.

    Also, if you’re ever late on accident, call your CC company and explain. They can reverse it and help make it disappear. Being nice is the best approach in my opinion. 🙂

    1. Post

      Oh thanks for the tip Michael, that’s a good one. I definitely agree, a personal approach to life will get you very far!

      Thanks for the comment 🙂

  8. Hey, I had the same issue of getting approved by creditors due to my low score and low history. I bypassed a credit repair agency website and I was directed to their customer support and I was told what to do and within few days my bad credit report would get back on track.

  9. I really appreciate your advice to try and never miss a payment when you want to keep your credit score up. My wife and I are trying to increase our credit score to buy a house. I will be sure to tell my wife that we need to keep all of our payments on time!

  10. Hi Erik,

    It’s a very detailed and useful information you provided here. I have just started my career and want no negative impact on my credit score. That’s why I stumbled upon your article and now I am going to bookmark this.

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