If you’re looking to improve your credit scores, there are lots of ways to do that. But there are also some behind-the-scenes changes that can cause your credit score to go up without you doing much of anything at all. So before you get started trying to fix your credit, check out if some of these factors can help you on your way to a better credit score.
1. Your Accounts Get Older
Like fine wine, credit accounts improve with age. Not your age, mind you, but the ages of all your credit lines (kept in good standing, of course). The FICO score models, for instance, use the length of your credit history to account for roughly 15% of your score. All other things being equal, the longer your credit history is, the better your score should be.
Length of credit history takes into consideration how long your credit accounts have been opened, including the age of your oldest account, the age of your newest account, and the average age of all your accounts. You can see how the age of your credit is affecting your credit scores for free on Credit.com.
2. When Negatives ‘Age Off’
Certain debts have an expiration date of sorts when it comes to your credit report. A collection account, for example, is supposed to age off of your credit report after 7 years plus 180 days from when it was first delinquent. (You can see our guide to the statutes of limitations on debts in each state across the U.S. here.) If it’s still on your report, you can dispute the credit report error with the major bureaus as well.
3. When the Issuer Increases Your Credit Limit
Credit scores are calculated in part based on how much of your available credit is being used.
Your amount of debt, which includes your “debt usage,”or “utilization” accounts for roughly 30% of your credit scores. That’s more than any other single factor except paying on time, which accounts for about 35% of your score. So, in a nutshell, getting a higher credit limit — as long as you don’t also increase your debt — can be good for your credit score because it results in a lower debt utilization. And sometimes issuers review your file and decide you’re ready for an increased credit limit without you having to ask for one.
You can calculate your overall utilization by adding up all the reported balances on your revolving accounts (credit cards, lines of credit) and dividing that figure by the total credit limits. Credit scores also weigh each individual account’s utilization rate.
4. When You Take Out a Loan
While your credit score might take an initial ding from the hard inquiry that can accompany applying for a loan, in the long run, it can help your scores if the account is unlike other types of credit you already possess. (And, of course, you keep it in good standing by making timely payments.) For example, if you already have credit cards and you take out your first car loan, your score might take an initial ding from the hard inquiry and new credit line, but this loan may help your scores over time by improving the “diversity” of your credit profile.
5. When You Lose Your Credit Card
It’s not always the case, but there are circumstances in which you report your card lost or stolen that your credit score could improve. When you report the card lost or stolen, some issuers close that account, create a new account number for you and move all your history over to that account, including the original open date. They then add that new account to your credit report.
If the original account has been open for a long time, you now have two trade lines with that length of history, which increases the average age of your credit. As mentioned earlier, credit age makes up roughly 15% of your credit score.
Not all card issuers follow the same protocols when reporting a lost or stolen card to the credit bureaus, so it’s not a good idea to try to improve your credit score by reporting your card lost or stolen when it actually isn’t.
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report