Could This Improve My Credit Score? [Quiz]
December 13, 2021
Got a credit score that could use a bump? Looking to show some love to that three-digit numeral that expresses your creditworthiness to potential lenders?
The good news is that, even if you’ve been neglecting your credit score, it’s never too late to take steps to improve it. But first, you need to know which steps to take. So, to help point you in the right direction, here are 10 questions designed to separate fact from fiction on what could (or could not) put you on track to a better credit score.
1. Your impulse-control-challenged spouse—an authorized user on your credit card—uses the card to purchase an expensive collection of royal frog figurines but can’t afford to reimburse you when the card payment comes due. Rather than ask them to curb their spending and be accused of being too controlling, you, in a very controlled manner, contact your card issuer and remove them from the account.
□ Yes, this could give my credit score a quick bump.
□ No, this won’t immediately boost my credit score.
ANSWER - NO!
The act of removing an authorized user from your credit card will not affect your credit score. However, if removing that authorized user from the account helps keep your credit utilization ratio lower or the account from becoming past due, then this move could contribute to a better credit score down the road—and prevent more crowned amphibians from cluttering up your home!
2. While performing with your death metal band—Vestibule of Violence—during college, you destroy a dozen perfectly good guitars, all of which were financed by maxing out your credit card. Your credit also gets destroyed because you never pay off your outstanding card balance and the account is written off to a collection agency. Now gainfully employed and a productive member of the society you once railed against, you pay the agency the outstanding balance plus any fees and accumulated interest charges.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER – YES! or NO!
While paying what you owe is the right thing to do, paying off an outstanding balance to a collection agency won’t necessarily improve your credit score. Some newer credit-scoring models, such as FICO 8, the most commonly used version of the FICO model, ignore collection accounts with less than a $100 balance. But older credit-scoring models do not ignore collection accounts, no matter what their balance, so that account could stay in your credit report(s) for up to seven years.
3. The only credit you’ve ever had is a credit card, and you’ve paid your card balance on time, every time for two years straight, amassing an impressive payment history. To celebrate, you buy yourself a personal watercraft (PWC) with 160 horsepower and a sick turning radius, which you finance via an installment loan from the dealer.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - YES!
Since you previously had only revolving credit (credit cards) in your credit mix, adding an installment loan diversifies your credit mix, which accounts for 10 percent of your FICO® Score. A more diverse mix of credit could give your credit score a bump. Just be sure to make your loan payments on time each month or your stellar payment history could sink like a PWC with a hole in the hull, which could, in turn, lower your credit score.
4. Your boss’ daughter eats way too much potato salad at the company picnic and cramps up swimming after failing to wait at least 30 minutes. You spring into action, dive in after her, and bring her safely ashore, which earns you a handsome raise from your boss, increasing your annual income by 20%.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - NO!
While having a higher annual income could improve your chances of being approved for credit, your income does not affect your credit score. But, if you use that extra income to pay down debt and reduce your credit utilization ratio, or to make consistent on-time payments on credit accounts, it could contribute to raising your credit score down the road.
5. The following year at the company picnic, your boss’ son chokes on a hot dog in front of you. You once again spring into action, saving his life by implementing the Heimlich maneuver and dislodging a chunk of suffocating sausage. Wary of rumors that the only way to get a raise is to save the life of one of his kids, your boss rewards you by paying down $5,000 of your credit card debt in lieu of another raise.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - YES!
Paying down revolving debt, which credit card debt is, could reduce your credit utilization ratio, a significant factor in calculating a credit score. A lower credit utilization ratio (typically below 30%) could contribute to a higher credit score. On a side note, to avoid any rumors of impropriety, either you or your boss’ children should probably not attend next year’s picnic.
6. You want to buy your dog Rex a Shetland pony. When people ask why your dog needs a pony, you respond, “Because a full-sized horse would be way too big for him,” but that’s beside the point. You’ve found one for sale, but the asking price is $500 over your credit card’s limit. So, you request a $500 credit line increase, which your card issuer grants. But then the sale falls through because Rex decides he’d rather have a kitten.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - YES!
A credit line increase could help decrease your credit utilization ratio, especially if you don’t use the additional available credit. Which, in this case, you did not because you bought a kitten instead of a pony, and kittens are less expensive than ponies—particularly if you adopt one from a shelter. As we now know, a lower credit utilization ratio could contribute to a higher credit score.
7. Your shoulder aches from the weight of your overstuffed purse, so you clean it out. At the bottom, you discover a credit card from an account you’ve had for 10 years but haven’t used for over a year. It’s still valid, but you figure closing the account and destroying the card will kill two birds with one stone by (1) improving your credit score and (2) reducing the weight of your purse. So, you cancel the card and destroy it.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - NO!
Canceling an older credit card could actually harm your credit score two ways: (1) by lowering the length of your credit history and (2) by decreasing the sum of your revolving credit limits, which could increase your credit utilization ratio. It may be better for your credit score to leave the account open. Plus, a plastic credit card only weighs about 5 grams, so removing it from your purse really isn’t doing your shoulder any favors. Maybe lose some loose change instead.
8. After you and Mr. Whiskers read a fantastic article on checking your credit reports annually, you get free copies of yours from AnnualCreditReport.com. Perusing them, you notice one of your credit card accounts shows that you made a late payment, but you know for a fact you didn’t. You dispute the error, and the late payment is removed from your credit reports, causing Mr. Whiskers to purr ecstatically because he hates false information—especially the blatant lie about cats having nine lives!
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - YES!
A single late payment more than 30 days past due could lower your credit score by as many as 100 points, so removing that incorrect information from your credit reports should raise your score, assuming all other factors stay the same. It will not do anything, however, for debunking widespread cat myths and misconceptions.
9. After meeting with a career counselor, you realize that being a freelance street clown no longer fulfills you. So, you apply for a commentator position on a national cable news network (insert your own clown joke here) and get the job. You figure your new full-time gig will demonstrate more stability and give your credit score a much-needed boost.
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - NO!
While employment stability and a steady paycheck can contribute to more financial success, they won’t do anything for your credit score. Credit-scoring models do not factor in your job, salary, or employment history, so it matters not (credit-score-wise, anyway), whether you make your living as a street clown who wears makeup or a talking head who wears makeup.
10. You take a pithy online credit quiz and learn that the best way to build a positive credit history—the #1 factor in determining credit score—is to make consistent, on-time payments. Figuring the more credit cards you have, the more on-time payments you can make, you apply for 10 separate cards within the span of a week—even for a pet credit card, and you’ve never owned a pet!
□ Yes, this could give my credit score a quick bump.
□ No, this will not immediately boost my credit score.
ANSWER - NO!
When you apply for a credit card, a hard inquiry is typically generated, which can lower your credit score by as many as 10 points. So, apply for new credit sparingly and, whenever possible, see if you pre-qualify or are pre-approved for a credit card before actually applying. This lets you know if you’re likely to be approved without generating a hard inquiry.
Congratulations, you’ve completed the quiz!
Now that you know more about what could boost your credit score—or know that you already knew quite a bit—be sure to check out some of the additional content here on Credit One Central, your one-stop source for all things credit.
After realizing he couldn’t pay back his outrageous film school student loans with rejection notices from Hollywood studios, Sean focused his screenwriting skills on scripting corporate videos. Videos led to marketing communications, which led to articles and, before he knew it, Sean was making a living as a writer. He continues to do so today by leveraging his expertise in credit, financial planning, wealth-building, and living your best life for Credit One Bank.
