Your credit score is a number you may not pay much attention to until you’re ready to apply for a credit card or sign a loan. But in reality, it’s always important to know what your credit score looks like.
The higher that number, the more likely you are to get approved to borrow money when you want or need to. A higher credit score could also lead to a more favorable interest rate when you’re signing a fixed-rate loan, like a mortgage.
FICO just released credit score data that found that as of October of 2023, the average U.S. credit score was 717. That’s notable because earlier in 2023, the average credit score was 718.
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Now, since we’re only talking about a one-point drop, that 717 shouldn’t necessarily sound alarms about a looming consumer credit score crisis. But it is worth noting that October’s drop marks the first time in a decade the average consumer credit score fell from one reporting period to another. (The period ending October 2023 is the latest one from FICO).
If your credit score fell recently, it’s a good idea to get it back up to where it was before — or even beyond. And even if your credit score didn’t recently fall, it might benefit from a boost nonetheless. Here are some steps you can take to make that happen.
1. Pay all bills on time
Your payment history carries more weight than any other factor when calculating your credit score. Paying bills in a timely manner could lead to a nice credit score boost, or at least keep your score stable if you’re already making payments on-time regularly.
However, you have to give that time to happen. It can take many months of on-time payments to see that positive activity reflected in your credit score, so don’t be discouraged if it doesn’t happen right away.
2. Pay off credit card debt
Your credit utilization ratio is another important factor in calculating your credit score. It represents the amount of revolving credit you’re using at a single point in time.
A ratio of 30% or less will usually reflect favorably on a credit score, but exceeding that mark could result in credit score damage. In general, it’s best to keep that ratio as low as possible. So if you’re carrying a large balance on your credit cards, paying some of it off could result in a credit score boost.
For example, let’s say you’re at 40% utilization because you owe $4,000 on a total $10,000 spending limit on your various credit cards. If you’re able to pay off $1,000 of that sum, you’ll be down to 30% utilization, which is a better place to be from a credit score perspective.
3. Check your credit reports for errors
You’re entitled to a free copy of your credit report each week from each of the three major reporting bureaus — Experian, Equifax, and TransUnion. You don’t have to check your credit report every week — that’s overkill. But it is a good idea to check it once every couple of months, or once a quarter.
You never know when a credit report of yours might contain an error that works against you, like a delinquent debt you can actually prove you paid on time. That’s why it’s so important to give your credit report a look — and to do so across all three bureaus.
Correcting a mistake like the aforementioned one could result in a fairly quick credit score boost. And why should you allow your credit score to take a hit because of something you didn’t actually do?
It’s not all that disturbing to see the average consumer credit score fall by one point. Having a score of 717 versus 718 isn’t going to make much of a difference when it comes to qualifying for a loan or line of credit. But if your credit score has been going down instead of up, it’s a good idea to do what you can to break that pattern. The higher your score, the more financial benefit you stand to reap.
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