Here’s What Happens When Your Credit Score Rises by 100 Points

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A large increase in your credit score could open up more affordable borrowing options. Read on for tips on how to boost your score to reap the benefits. 

Your credit score says a lot about you as a borrower. It tells lenders whether you’re someone who manages their debt well and can be trusted to repay debts in a timely manner. That’s why it helps to build up as high a credit score as you can. And if you’re able to raise your credit score by 100 points, you might open up a world of affordable borrowing opportunities.

A 100-point credit score boost can do a lot of good

Your credit score may not rise by 100 points overnight. But if you take certain steps to improve it, like paying all of your bills on time, then gradually, you might see it go up by 100 points.

The higher your credit score, the more likely you are to get approved when you want to borrow money or sign up for a new credit card. And you’re also more likely to snag a competitive borrowing rate on a loan when you apply with strong credit.

The reason for that is simple. Lenders perceive borrowers with higher credit scores to be less of a risk. So in return, you get rewarded in the form of a lower interest rate on the loan you’re signing. A lower credit score could lead to a higher interest rate when you go to borrow money, thereby costing you more.

As an example, let’s say you’re looking to sign a $300,000 mortgage today. FICO says that with a score of 800, the average rate you’ll get is 6.488% (as of this writing), resulting in a monthly payment of $1,894.

On the other hand, if your credit score is 700, the rate you’d be looking at, on average, is 6.710%. And that would leave you with a monthly payment of $1,938. So all told, in this case, a credit score that’s 100 points higher could save you $44 a month, or $528 a year.

How to boost your credit score

Your payment history carries more weight than any other individual factor when calculating your credit score, so it’s important to pay all of your bills on time if you want your credit score to increase. Another thing you can do is pay down a chunk of existing credit card debt. The lower your total outstanding balance relative to your spending limit across your various cards, the more it can help your score.

One additional thing it pays to do if you’re looking to give your credit score a lift is check your credit report for errors. That’s because a mistake that paints you in a less favorable light could be dragging your credit score down, and correcting it could result in a quick boost.

Let’s say your credit report shows you were 90 days late paying a bill when, in reality, you paid it on time. If you can dispute that error and get it corrected, that alone might result in a credit score boost of close to 100 points, depending on your circumstances.

All told, raising your credit score by 100 points could do a lot of good things for your finances. So if you feel your score needs work, take these steps to help it steadily improve.

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