Raising your credit score can help you save $92 per month, report finds. Here are some expert tips (2024)

Jose Luis Pelaez Inc

With consumer prices still rising due to higher inflation, there is one way to save money that you may be overlooking: raising your credit score.

Increasing your score from fair (580 to 669) to very good (740 to 799) may help you save $22,263 over the life of your credit and loans, according to a new LendingTree study. Mortgages represent the biggest portion of that savings, with $16,677.

Overall, consumers stand to save an extra $92 per month, LendingTree estimates, based on four common debt types: auto loans, credit cards, mortgages and personal loans.

The total projected savings is down from a sum of $49,472 calculated by LendingTree in 2022, due to changes in the interest rate environment. Nevertheless, consumers with good credit scores still have an advantage.

"There is little in life that's more expensive than crummy credit," said Matt Schulz, chief credit analyst at LendingTree.

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Improving your credit score can save you tens of thousands of dollars over the course of your life through lower interest rates, lower fees and other terms associated with loans, according to Schulz.

"It's a big deal, especially when you consider what else you could do with that extra money," Schulz said.

A lot of people are relying on credit cards and loans for purchases, based on data from the last quarter of 2023, said Bruce McClary, senior vice president at the National Foundation for Credit Counseling.

"Many people right now are still struggling with the cost of living and keeping up," McClary said.

The credit score you should shoot for

Prospective lenders use your credit score to gauge your financial behavior, particularly when it comes to how likely you are to pay a loan back on time.

Credit scores typically range from as low as 300 to as high as 850.

Generally, if you are over 700, you are doing OK, according to Schulz. But the higher above 700 you can get your score, the better off you are, he explained.

"If you can get up to 740, 750, you're going to get most loans that you apply for," Schulz said.

If your score is lower — around 670 or 680 — you will still have a lot of options, he said.

Keep in mind that your credit score may vary by provider, such as FICO or VantageScore. If you're applying for a loan, it helps to ask the lender which score they will check, Schulz said.

How to best improve your score

Your credit score is based on a mathematical model that takes multiple factors into account.

That includes your current unpaid debts; bill payment history; the number and kinds of loans you have; how long you have had your accounts open; how much of your available credit you're using; any new applications for credit you have made; and whether you have any debts in collection, foreclosure or in bankruptcy.

To improve your score, it first helps to look at your credit report to see what might be weighing it down. You can monitor your credit report weekly, for free, from the three major credit reporting agencies by visiting AnnualCreditReport.com.

"It's a great resource in situations where you're looking for ways to improve your credit score," McClary said.

Inaccuracies on those reports can drag your score down and alert you to potential fraudulent activities in your name, Schulz said. If you spot those discrepancies, it helps to contact the credit bureau and lenders as soon as possible, he said.

Raising your credit score can help you save $92 per month, report finds. Here are some expert tips (1)

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Consumer's credit scores have held up despite putting on more debt

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One way to quickly boost your credit score is to ask your lenders to raise your credit limits, which can bring your credit utilization down, he said.

The best way to improve your utilization is to pay the balances down, if you can afford to, he said.

It also helps to consolidate your debts. To assess your options, consider reaching out to anonprofit credit counseling agencyfor advice.

Automating your payments can also help ensure you do not miss a bill due date, which can lower your credit score.

While your credit score affects the rates of the loans you receive, it may also affect other aspects of your financial life, such as your car insurance rates, recent Bankrate research found.

If your credit score improves, you may have your auto insurance policy adjusted by reporting the change to your insurer, said Bankrate analyst Shannon Martin.

Raising your credit score can help you save $92 per month, report finds. Here are some expert tips (2024)


How will a good credit score help you save money? ›

“A high credit score means that you will most likely qualify for the lowest interest rates and fees for new loans and lines of credit,” McClary says. And if you're applying for a mortgage, you could save upwards of 1% in interest.

How much can I raise my credit score per month? ›

It all depends on your unique situation and the specific actions you're taking to improve your credit. Realistically, you probably won't see your credit score increase by more than 10 points in a month.

How can I improve my credit score by paying monthly payments? ›

Consistently making full, on-time payments will demonstrate to both lenders and credit card issuers that you are responsible in managing your money, helping to elevate your credit score and putting you in a better position when it comes to borrowing money at attractive rates, etc.

What is the fastest way to boost credit score? ›

The fastest way to get a credit score boost is to lower the amount of revolving debt (which is generally credit cards) you're carrying. The typical guidance from personal finance experts is to use no more than 30% of your credit limit, which applies both to individual cards and across all cards.

What brings credit score down the most? ›

  • Even one late payment can cause credit scores to drop.
  • Carrying high balances may also impact credit scores.
  • Closing a credit card account may impact your debt to credit utilization ratio.

What raises your credit score more? ›

Impact: Highly influential. Your record of paying bills on time is the largest scoring factor in both FICO and VantageScore credit scoring systems. Time commitment: Low. Prevent missed payments by setting up account reminders and considering automatic payments to cover at least the minimum.

How fast can I add 100 points to my credit score? ›

Here are 10 ways to increase your credit score by 100 points - most often this can be done within 45 days.
  • Check your credit report. ...
  • Pay your bills on time. ...
  • Pay off any collections. ...
  • Get caught up on past-due bills. ...
  • Keep balances low on your credit cards. ...
  • Pay off debt rather than continually transferring it.

How long does it take to fix a 500 credit score? ›

Average Recovery Time

For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.

Can my credit score go up 200 points in a month? ›

While you can improve your credit score by 200 points in 30 days, it is also essential to remember that the improvement is based on your current credit status and mix. Some might experience quicker improvements, while others may need more time based on their unique credit histories and financial situations.

Does making 2 payments a month increase credit score? ›

That said, making two payments per month actually can help your score—but for a different reason. This strategy makes your credit utilization ratio appear lower, which can boost your credit score in the long run.

What is the 15 3 rule? ›

You make one payment 15 days before your statement is due and another payment three days before the due date. By doing this, you can lower your overall credit utilization ratio, which can raise your credit score. Keeping a good credit score is important if you want to apply for new credit cards.

Should I pay off my credit card in full or leave a small balance? ›

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

What is the no 1 way to raise your credit score? ›

1. Make your payments on time. Paying your bills on time is the most important thing you can do to help raise your score.

How fast does credit score go up after paying off credit card? ›

How long after paying off debt will my credit scores change? The three nationwide CRAs generally receive new information from your creditors and lenders every 30 to 45 days. If you've recently paid off a debt, it may take more than a month to see any changes in your credit scores.

What are 3 benefits of having a good credit score? ›

If you have a good credit score, you have a much better chance of qualifying for the best interest rates, which means you'll pay lower finance charges on credit card balances and loans. The less you pay in interest, the sooner you'll pay off the debt, and the more money you'll have for other expenses.

How can your credit score impact you financially? ›

Companies use credit scores to make decisions on whether to offer you a mortgage, credit card, auto loan, and other credit products, as well as for tenant screening and insurance. They are also used to determine the interest rate and credit limit you receive.

Does having a good credit score save you money when getting a loan? ›

When you apply for a loan, reputable lenders will check your credit. The higher your score, the more likely you are to get approved, and the lower your interest rate will be. If you have a score less than good (under 670), you likely won't get approved by most lenders.

Why is credit important in the economy? ›

Having credit enables consumers to buy goods or assets without having to pay for them in cash at the time of purchase. Having a good credit record means that a person has an established history of paying back 100% of his/her debts on time.

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