How to Increase a FICO Score?

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A FICO score is an analytic notch that combines both human and artificial intelligence to help a lender decide whether to lend or issue a credit to a borrower.

It’s a three-digit number, ranging between 300 and 850, which lenders use to determine your capability of repaying the loan based on your credit information reports.

The FICO score was created by the Fair Isaac Corporation (FICO) in 1956 though the credit history started as early as the 1800s with most credit conducted by businesses and not customers. The financial institutions take advantage of this score to weigh the options of lending money to the borrowers from their creditworthiness history. Over time, lenders guided by this score developed criteria to issue a credit to debtors who had a positive credit history.

How The FICO Score Helps Lenders

FICO scores have been adapted into versions that lenders use to assess a borrower’s credit history and determine their eligibility to future loans. It has several variations: UltraFICO score, FICO ® Score 10, and 10T, among others, that a lender uses, but all converge to scoring the borrower’s ability to receive credit and repay promptly.

The scores take into consideration five fundamental characteristics to define creditworthiness. Alongside other details that lenders use to determine the borrower’s ability to repay debts, these five key elements take precedence.

Payment History

A borrower’s credit score is based on their payment history, with 35% of their credit score for each scoring model. This model is an indicator that shows if borrowers pay their bills on time or not. Borrowers with excellent payment history score higher to prospective lenders than those with a bad history.

The Current Level of Indebtedness

Debt levels are a good measure of a borrower’s ability to borrow more from other lending institutions. The outstanding debts and the flow of obligations determine the lender’s level of trust to extend more credit to a borrower. Government debt and an individual’s debt history with lending institutions are considered when determining whether a lender will end more debts when approached. The borrowers with low levels of indebtedness are at an advantage to scoring high on their FICO score to the prospective lenders than those with a high level of debt.

Types of Credit

A borrower’s ability to increase their credit limit is not only an opportunity to spend beyond their means but also a way of handling emergencies once they come knocking on their doorstep. A higher credit limit boosts a borrower’s FICO score. For a borrower to qualify for more, they must consider the three C’s of credit: character, collateral, and capacity.


Collateral is what a lender accepts as security to extend debt to a borrower, which the lender can seize should the borrower fail to repay. It is the security for the credit issued. Typically, collateral is in the form of assets that can be sold to pay off the loan. The collateral should be easily convertible into cash to recover the loan.


The lender will not extend credit to a borrower without confidence that the loan will be paid back. The borrower’s ability to repay the loan earns more points on the FICO scale. Lenders will scrutinize whether the borrower has been engaged regularly in a job that can sustain their credit use. They look at salary, other loan repayment history, and the number of dependents. Using these criteria, they determine the borrower’s ability to repay the loan.

Length of Credit History

Any lender is required to know how long a borrower’s account has been open and active. A borrower with a free and active account will score higher on the FICO scale than the contrary. An account with a good payment history and no default history will also score higher. The lender uses credit scoring algorithms to calculate the average age of a borrower’s accounts.

The most noticeable effects of a borrower’s credit score are determined by:

Credit utilization. A borrower should not use more than 30% of their available credit. Average credit history of your accounts will give useful details about this.

Payment history. Once the credit is extended to you by a lender, make sure that you pay on time. This credit history will add a positive FICO score for you as the borrower.

New Credit Accounts

A borrower who has many credit accounts is considered less reliable on the FICO score. There is a higher risk of lending to a borrower who has opened several new credit accounts in a short period of time. The lender risks losing their money to this kind of borrower, especially if they do not have a long credit history. Therefore, it is advisable that a borrower refrains from opening too many new accounts at one time in order to sustain their average account age. This earns positive points toward the FICO score and increases opportunities for loans.

How To Increase A FICO Score By A Borrower

Now that we’ve examined what a FICO score is and what lenders look for from a borrower’s credit history, we can underscore what is required of a borrower to increase it.

Do not open new accounts too quickly

A borrower should maintain the same credit account for a long time to secure trust in the lender. Opening new accounts too promptly decreases confidence by the lender to extend credit. Regardless of how long a borrower has had a positive credit history, opening new accounts lowers their FICO scores. Therefore, increase the FICO score by maintaining an average account age.

Besides, an account holder ought to assess themselves using their credit reports to ‘rate their shopping’ from the lender. FICO considers the age of your account and scores your eligibility to acquire more credit.

Check your credit reports for inaccuracies

Obtain a financial statement from your agency and check for any inaccuracies or incorrect information. Dispute any errors from the report and make sure your credit report is accurate. If a failure in your financial statement could negatively affect your creditworthiness, fix it with your agency so that you do not appear riskier to a lender. The negative errors on the reports could cost you the ability to obtain loans in the future and increase associated interest rates. Increase your FICO score by eliminating common mistakes in your account.

Pay bills on time

35% of a FICO score’s calculation is based on your ability to pay bills on time to lenders and creditors. Use payment reminders on your bank’s portal to alert you when the due date nears for repayment. You can also set up automatic payments with your bank and loan lenders to make transactions from your accounts. By having a clean record of on time payments, you will increase your FICO score.

Reduce the debts you owe

A FICO score’s calculation bases your financial discipline on the amount of debts you owe. If you keep your balances low on credit cards but have an overall high amount of outstanding debt, you will score low. Therefore, it’s advisable that you reduce your current debts before reaching out for a new one. Having many debts does not decrease your score, but the FICO score looks at the overall ratio of money you owe to the amount of credit available.

Every borrower wants to obtain some sort of loan for their specific purposes, whether it’s to start a business, grow their business, or other intended use, and they expect that if they apply, they will get a positive response. On the contrary, every lender wants to extend a loan to a reliable borrower with confidence that it will be repaid in full, promptly, and efficiently. It is in this dilemma that borrowers and lenders want their intentions addressed without flaws. A borrower should maintain a FICO score between 670 and 739, with 670 being the minimum and the latter being the maximum. This range indicates “credible” credit history, and both lenders and borrowers are happy issuing credit and getting repayment promptly.