Ace the test: How to boost credit scores

Every American knows how critical their credit score is. Or at least, they should. 

A high score unlocks a whole host of financial opportunities: Lower car payments, cheaper mortgages, or even approval for that new rental apartment or job you’ve been eyeing.

But here’s something you may not know: Some parts of the country are doing better than others, when it comes to boosting credit scores.

The financial site WalletHub recently crunched the data, to find out which city cranked its collective credit up the most in a single year. The winner: St. Louis, with a 3.49% increase compared to last year, making for an average score of 652. 

Runners-up included Des Moines, Iowa, with a 3.19% jump to 647; and Winston-Salem, N.C., with a 2.28% increase to 628.

That’s exactly the kind of positive momentum you want: Even if your credit record is sparse because you’re just starting out in life, or if it is on the low side because of missed payments, you are aiming to boost those scores over time and reap the rewards.

“If you get to a score like 760 or 780, then you’re going to be getting best interest rates available,” says Liz Weston, a personal finance columnist for the L.A. Times and author of the book “Your Credit Score: How To Improve the 3-Digit Number That Shapes Your Financial Future”. “Even if you have bad credit, you can make it better.”

Some states are doing better than others, too. WalletHub did a deep dive into which parts of the country are being most ‘diligent’ about their credit: That means whether people are paying their debts on time, the share of the population experiencing foreclosures or bankruptcies, and even whether residents are checking and correcting errors on their credit reports. 

The winners: People in Massachusetts, Iowa, Vermont, Alaska and Hawaii.

So what’s the big secret of these credit-boosting cities and states? 

A number of factors go into analyzing credit records, to generate the ‘FICO’ score (thanks to the firm behind it, Fair Isaac Corp.) or the competing VantageScore, developed by the major credit agencies Equifax, Experian and TransUnion. 

A few key points to consider:

-A solid payment history. Obviously lenders want to see that a borrower is a reliable risk. So pay every bill on time, every time – you don’t want to be a few days late, and you definitely don’t want to be 30 or 60 days behind. In FICO’s system, that history accounts for around 35% of your total score.

Mistakes do happen – bills get lost in the mail, due dates slip your mind – so scheduling payments beforehand is a smart strategy, especially when dealing with joint accounts. “Set up autopay to avoid missed payments and assign who’s tracking what,” says Doug Boneparth, president of Bone Fide Wealth in New York City and co-author (with wife Heather) of the upcoming book “Money Together”. “Clear roles reduce stress and credit slip-ups.”

-A reasonable amount owed. Don’t max out your credit lines, because that makes lenders nervous. Ideally you want to keep what’s called the ‘credit utilization ratio’ below 30%. So if you have available credit of $1,000, as an example, keep the amount borrowed below $300.

“There should be a nice big gap there,” advises Weston. “Credit utilization below 30% is good, below 20% is even better, and below 10% is best.”

-Length of credit history. For young adults fresh out of high school or college, establishing credit is an uphill climb, because they just don’t have proof of years of reliable debt payments. 

One potential solution here: Leveraging the power of being an ‘authorized user’. For teens or young adults, that means being named as a user on parents’ cards (even if they’re not actually making purchases). Couples too can “add each other as authorized users on credit cards with strong histories,” says Boneparth. “One person’s good credit can lift both scores over time.”

-Secured credit cards can help. A secured charge card essentially pulls spending power from the balance in your spending account. With the Build Card on Current, it connects to a member’s existing spending balance, and with every transaction you make, the funds are held in reserve as you spend, which are then used to pay your bill at the end of each month. Members can set their bill to AutoPay and Current then reports these as on-time payments to all three of the major credit bureaus (TransUnion, Equifax, Experian) each month to help build your credit score.

It can be an effective way to build your credit history and minimize risks of debt.* 

-No credit splurges. Open too many credit lines, too quickly, and lenders get skittish, because it could indicate you’re in some financial trouble. It could also suggest identity theft, if a scammer has gotten hold of your information and is applying for numerous cards in your name. That’s why the amount of new credit factors into 10% of your FICO score.

If you don’t know what goes exactly into your credit score, this whole process can seem pretty mysterious. But when you do know, then you can get to work on making it better. 

Says Weston: “Lenders just want to see smart, healthy credit habits.”


*Individual results may vary. Using your credit card responsibly may allow you to improve your credit score. Credit building depends on various factors, including your payment history, credit utilization, length of credit history, and other financial activities.