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Does Your Credit Rating Need a Boost?

Written By Tim Chesser, CFP® November 21, 2023

Many individuals faced unexpected financial challenges, such as job loss, medical expenses, or other unforeseen circumstances during COVID-19. These circumstances may have forced you to make tough decisions regarding your finances, such as prioritizing bills, reducing savings, or even borrowing from your 401(k) account. Whether or not you were directly impacted by the events or have impending student loan repayment, maintaining a healthy credit score remains a crucial aspect of your overall financial well-being. Let’s explore the importance of your credit score and how to manage it effectively.

Understanding Your Credit Score

Your credit score, particularly your FICO score, plays a pivotal role in your financial life.


1.  FICO Score: The FICO score, developed by the Fair Isaac Corporation, is the most widely used scoring system to assess an individual’s credit history. Lenders rely on these scores to gauge your creditworthiness, which influences your ability to secure credit cards and loans, the interest rates you’re offered, the length of repayment terms, and even the need for a cosigner. In extreme cases, a low FICO score can lead to loan denials.

FICO scores range from 300 to 850, with scores above 800 considered excellent and those below 640 falling into the below-average or subprime category.

Most lenders use the average score from the three major credit reporting agencies: Experian, TransUnion, and Equifax.

The following factors determine your FICO credit score:

Payment History (35%): Timely payment of bills and debts.

Credit Utilization (30%): The ratio of debt owed to available credit.

Length of Credit History (15%): The duration of your credit accounts.

Types of Credit Used (10%): The diversity of credit accounts.

New Credit Inquiries (10%): Recent credit applications and inquiries.

2.  Alternative Credit Scores: In addition to FICO, there are alternative credit scoring models worth considering in 2023:

3.  VantageScore: This scoring model, used by websites like Credit Karma, differs from FICO in its treatment of various aspects of your credit report.

4.  UltraFICO: Offered by Experian, it allows consumers to boost their credit scores by linking their checking, savings, or money market accounts.

5.  Experian Boost: This service helps improve FICO scores by recognizing on-time phone and utility payments. It’s exclusive to Experian.

Alternative scores like UltraFICO and Experian Boost are especially beneficial for individuals with subprime credit or limited credit history.


In addition to knowing your credit score, it’s essential to understand what contributes to it by reviewing your credit report. Credit reports provide a detailed record of your credit history, including personal information, account details, payment history, and any accounts in collections. They also note if you’ve filed for bankruptcy.


Due to the critical role your credit report plays in your financial life, it’s essential to regularly check it for accuracy. In 2023, here’s how you can do that: You have the right to receive a free report from each of the three major credit reporting agencies every year.

Innovis: This is another credit reporting agency that offers free credit reports. While it doesn’t include a credit score, it’s wise to verify your information from this source.

Credit KarmaNerdWallet, and Bankrate: These platforms offer free access to one or two of the major credit reports, along with additional services such as credit monitoring and free credit scores.

Identity Theft Protection Services: Consider organizations like LifeLock and Identity Guard for enhanced credit monitoring and identity theft protection, which typically involve a fee.


Since 2018, consumers have had the option to freeze their credit files for free. This restriction limits access to your credit reports, making it more challenging for identity thieves to open fraudulent accounts. A credit freeze does not affect your credit score, but it’s crucial to continue monitoring your existing accounts for unauthorized activity.


Repairing your credit score takes time, dedication, and patience. Remember, there are no quick fixes. Here are seven essential steps to improve your credit score over time:

  1. Review Your Credit Reports: Regularly check your credit reports for errors and dispute any inaccurate or missing information. Disputes can be filed and resolved through the FTC’s website.
  2. Pay Bills on Time: Ensure timely payment of bills to establish a positive payment history, even if you’ve missed payments in the past.
  3. Address Past-Due Accounts: Focus on reducing the amount of debt you owe, starting with past-due accounts. Consider strategies like the debt snowball or debt avalanche methods to tackle debt effectively.
  4. Be Cautious with New Credit: Open new credit accounts only when necessary. Be aware that closing unused credit cards doesn’t remove them from your credit report.
  5. Consider Credit Counseling: If needed, explore credit counseling agencies approved by the U.S. Department of Justice’s U.S. Trustee Program.
  6. Beware of Credit Repair Services: Approach credit repair companies with caution, as some may charge excessive fees and make misleading claims about their ability to fix credit.

Consider Bankruptcy as a Last Resort: Bankruptcy is a significant decision that can have long-lasting effects on your credit score. Consult the U.S. Trustee Program’s list of approved organizations if bankruptcy is being considered.


Your credit history is a fundamental component of your financial plan. Committing to monitoring and managing your credit score and report is crucial. While the process may require time and persistence, working to repair your credit is an investment in your long-term financial stability. Stay focused on your financial goals and remember that sound credit management is an essential part of achieving them.

This material has been provided for general informational purposes only and does not constitute either investment or tax advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a financial advisor or tax preparer.