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3 Ways to Improve Your FICO Score in 2023
Your most important credit score
Your FICO Score is a credit score used by 90% of the top United States lending institutions to determine your creditworthiness for products such as mortgages, auto loans, and personal loans. Moving into 2023, it is important to be of the ways you can improve your FICO Score to ensure you can qualify for a lower interest rate for the loan products you want. The following are three ways to improve your FICO Score in 2023:
1. Review Your Free Credit Report
2. Pay Your Full Statement Balances on Time
3. Keep Your Balances Low
1. Review Your Free Credit Report
To review your free credit report, you can navigate to Experian, one of the three major credit bureaus. Once you create your account, you will have free access to your credit report and FICO Score based on Experian data. From there, make sure everything looks fine such as your name, address, employer, open credit cards, open loans, and inquiries. If there is anything you wish to dispute on your credit report that may be negatively affecting your FICO Score, Experian provides an Online Dispute Center. Experian also provides free historic credit reports and FICO Scores from Equifax and TransUnion. For more up-to-date data from the two other major bureaus, there is a monthly fee.
2. Pay Your Full Statement Balances on Time
It is important to be a responsible user of credit. That is why it is important to always pay all your full statement balances on time for all your credit cards. By doing that, you are building a positive payment history, which makes up the largest portion of your FICO Score calculation (35%). For any loans you have, such as a mortgage or auto loan, make sure to pay your full required monthly balance on time.
3. Keep Your Balances Low
When it comes to your credit cards, it is important to keep your balances low. It is typically recommended that you should use 30% or less of your credit limit. I would recommend an even lower credit usage of 10% or lower. That means if your total credit limit across all your credit cards is $10,000, you should keep your total balances at $1,000 or below. Your amounts owed make up the second largest portion of your FICO Score calculation (30%).
By reviewing your free credit report, paying your full statement balances on time, and keeping your balances low, you will be on the path to improving your FICO Score in 2023. As of December 2022, my FICO Score is 771. I have seen it increase every month in 2022 due to my disciplined and responsible approach to using credit. In the comments, feel free to share other tips on improving your FICO Score.
