Use our handy tool kit—and learn from these women's experiences—to get your numbers back on track. Whether your number is low or high, these simple steps from experts can give it a boost. (FYI: Credit scores traditionally range from 300 to 850. The average FICO score, which is used by the vast majority of lenders, is 700.)
When Kishshana Palmer divorced in 2011, she embraced change in a big way: She settled in a new city, downsized to a small apartment, and put all her energy into growing her business. But so much transition came with a price tag, and by the time the chaos calmed, she’d racked up about $14,000 in credit card debt. “The interest rates mean it doesn’t feel like I’m chipping away at the balance much or able to save like I want,” says Kishshana. And she has a big dream: owning a place she and her 12-year-old daughter can call home. While the single mom is saving a down payment, her credit score of 660 could be standing in her way.
The Problem: It’s not impossible to qualify for a mortgage loan with a score of 660, but if Kishshana can bump up her score by as few as 40 points, she may shave 0.4% off the interest rate of her loan. On a $200,000 30-year fixed loan, that would mean ponying up $47 less each month, or $564 per year.
The Fix: Kishshana’s high card balances—which almost max out her available credit—are likely holding her score back. “People who utilize more of their available credit limits represent a risk to lenders, and that can lower your credit score,” says John Ulzheimer, a credit expert formerly of FICO and Equifax. One solution is to ask the credit card issuers to raise your limits. Even without changing the amount owed, your balance will then represent a lower percentage of your credit card max. “But only do this if you know you won’t use the increase,” he advises. You could also apply for a personal loan at the bank and use that money to wipe out your credit card balances. “That alone could help her score significantly,” says Liz Weston, CFP, author of Your Credit Score.
Just a few years ago, Victoria Cross’s credit score was an enviable 810. She didn’t have much in savings, but she was always careful not to max out her credit cards and to pay the bills on time. Then, in May 2016, Victoria lost her job, and her unemployment benefits were a fraction of her former paycheck. “Pretty soon I couldn’t make the minimum payments, and I started racking up late fees,” she says. Victoria then had to help move her 94-year-old mother into a convalescent facility and underwent unexpected surgery. Though she found a new job in July 2017, she still owes nearly $14,000 in credit card debt and $2,000 in overdue medical bills. Her score plummeted to below 500.
The Problem: Adults ages 53 to 62 are more likely than any other age group to say they have no money set aside in an emergency fund, according to a 2017 Bankrate survey. “A lot of people emerge from a crisis and find they’re struggling to pay unpayable debt,” says Weston. “Then they put off saving for retirement or starting that emergency fund while they spin their wheels with credit card debt.”
The Fix: Once the dust has settled, tally your unsecured personal debts such as credit card balances, personal loans, payday loans, and medical bills. If that sum is 50 percent or greater of your annual income, consider meeting with a bankruptcy attorney to figure out whether filing for Chapter 7 makes sense for you in the long run.
If your total debts are below the halfway mark of your salary, you can still seek support. A certified credit counselor at the National Foundation for Credit Counseling (NFCC) can help you figure out next steps. If you opt for a debt management plan, which may offer lower interest rates and a three- to five-year repayment period, make sure you seek out an agency accredited by the NFCC or the Financial Counseling Association of America. And set aside $500 in a separate savings account. “That can help you pay for a minor repair or other emergency without adding to your debt,” says Weston.
After ma out several credit cards in her 20s, Stephanie Shalit spent the next decade wiping out her debt and swearing off plastic. “I was single into my late 30s, making $125 per hour as a yoga teacher and just paying for everything in cash,” she says. In general, negative information—like high debt, late payments, foreclosures, and collections—stays on your credit report only for seven years, so those early mistakes have long since been wiped off Stephanie’s record. But avoiding credit altogether hadn’t cleaned up her credit score. In fact, it wasn’t until she met her future husband that Stephanie realized her cash-only lifestyle carried consequences. “We went to open a joint account, and my husband learned I had no credit score,” she says.
The Problem: Without a credit history, Stephanie could have been financially vulnerable if something happened to her husband (they have since worked out payment settlements with the companies that eliminated those risks). “Plus, even if you don’t want to borrow money, a nonexistent or low credit score can affect the price of mobile phone plans, car insurance premiums, and more,” says Weston.
The Fix: One in 10 Americans is “credit invisible,” meaning they don’t have enough credit history to generate a score with each of the three main credit-tracking bureaus, according to the Consumer Financial Protection Bureau.
Stephanie may be able to improve her credit score by having her husband add her as an authorized user to some of his credit cards, says Weston. Most card issuers will then export the spouse’s good history with those cards into your credit files. “That can solve the issue almost overnight if the other person’s credit history is imported into your credit report,” she says. If you’d rather not go the authorized user route, consider a secured credit card. These require a cash security deposit (which typically starts at $200 or $300), so they’re less risky for the issuer and easier to have approved.
To keep the card active without being tempted to charge more than you can afford, designate that card for a recurring monthly bill, like cable or Internet. Then head to the credit card website to set up automatic payments so the balance is paid in full each month. “Just having a credit card won’t put you in debt,” says credit expert Ulzheimer. “It’s all about how you use it.
Whether your number is low or high, these simple steps can give it a boost.
•Pay bills on time. Payment history makes up 35 percent of your FICO score, so put an end to missed payments pronto by setting up autopay on your recurring accounts.
•Review your history. Millions of Americans find errors on their credit reports. Once a year, request free copies of your credit report from each of the three credit bureaus at AnnualCreditReport.com.
•Minimize credit inquiries. Every time you apply for credit, it can cause a small dip in your credit score that lasts up to a year. The only time that’s not true is when you’re shopping for a big-ticket item like a mortgage, in which case any inquiries made within a 45-day period are counted as a single inquiry.