When it comes to improving your credit score, it’s absolutely not an overnight process, but it’s, it’s very possible with the right steps. The basics are straightforward: pay your bills on time, reduce your overall debt, and avoid racking up hard inquiries by constantly applying for new credit.Right, and about paying off debt—Sean, I had a client recently who was juggling some pretty high balances on a few credit cards. They worked on lowering their credit utilization by paying more than just the minimum due each month and saw their score jump by 50 points in just two months. It made a huge difference when they applied for a home loan.That’s a great example, James. Credit utilization is a significant factor determining your credit score. For those listening, this term essentially refers to how much of your available credit you’re actually using. Ideally, you want to keep that number under 30 percent—or lower, if possible—to show lenders you’re managing your credit responsibly.Right, but there’s gotta be that balance, though, like, between using enough of your credit to build a history and not overdoing it so it looks risky. Another thing that gets overlooked is keeping old credit accounts open, even if you’re not actively using them. It adds to the length of your credit history, which can also give a nice boost over time.Exactly, James. And, you know, closing accounts can inadvertently hurt your score too—not just because of reduced history, but because it lowers your available credit limit. That can actually increase your utilization rate, which may ding your score. So, it’s better to keep unused cards open as long as there are no annual fees attached.Totally. Oh, and we can't forget about avoiding multiple hard inquiries. I mean, have you seen how quickly just a few inquiries can drop a score?Absolutely. While it’s tempting to shop around for better deals, especially with credit cards or car loans, you have to be strategic. Some scoring models, like more recent FICO versions, give you a buffer period for inquiries related to specific types of loans—but not all do. So, timing really does matter when you’re applying.Gotcha. And hey—remember that client I mentioned? They were so close to getting stuck with a high-interest rate. But with just a little guidance on improving their FICO Score, they ended up qualifying for a much better deal. Like, we’re talking thousands saved over the life of their mortgage.That’s what makes all the difference, doesn’t it? Those small steps really compound into significant savings over time. And for anyone listening, it’s never too late to start improving your score. Every point counts towards better financial opportunities in the future.Now that we’ve covered some key strategies to boost your credit score, let’s dig into something that can often confuse people—how credit scores are actually calculated. The two main scoring systems, FICO and VantageScore, both aim to predict the likelihood of someone missing a payment, but only FICO scores are really used for mortgages. A VantageScore is the type of score that you might see on a credit card app or on Credit Karma and it can sometimes be missleading because it can easily be misconstrued for your FICO score. Oh, I didn't know that. What about the ranges? Are they the same between the two?They are, at least for the newer models. Both use the 300 to 850 range for general scores but the way they weigh certain factors, like payment history, can also vary. For instance, FICO puts 35 percent emphasis on payment history, while VantageScore assigns 40 percent. Small difference, but it can matter. In general, It's not uncommon for someone to keep track of their VantageScore and then be suprised when their FICO score comes back lower than expected. It all comes down to the differences in scoreing logic. Huh, that’s good to know. Oh, and didn’t you have a client who saw a big improvement in their score recently? Like, in just a few weeks?I did. They had a few late payments in their history, which hurt their score. But by focusing on making consistent on-time payments and reducing their utilization down to about 20 percent, their FICO score jumped over 50 points in a month. That improvement got them into a much better place for a loan.That’s incredible. And it really shows how knowing these factors, like payment history and credit usage, can make a difference.That client’s story really highlights something important—credit improvement isn’t just about knowing the factors impacting your score, but also how you navigate challenges. And one of the biggest challenges I see is high debt levels, especially when people are maxing out their credit cards or taking on more than they can manage.Yeah, and it’s wild how fast that can affect your score, right? Like, I had a friend who just kept putting off payments and letting those balances creep up. Next thing they knew, their score had dropped by almost 70 points in just two months!Rising balances can absolutely do that. And it’s not just the score drop—that ripple effect can make getting a good interest rate much harder. Something as simple as making more than the minimum payment each month or keeping your utilization below 30 percent can stop that downward spiral.Totally. And then you’ve got hard inquiries. I mean, they seem small at first, but if you’re applying for a bunch of credit in a short period, it can really start to add up.Exactly. It’s like a double-edged sword. Sure, shopping around for better offers is smart, but timing is everything. If those inquiries are spread out or tied to something like car loans, they might be grouped together in scoring models. Otherwise, it might look risky to lenders.Yeah, definitely gotta be strategic. Hey Sean, isnt it pretty common, while starting out, to have some challenges with managing your credit?Oh, no doubt. Many people early in their careers form small but harmful habits—like missing a due date or carrying higher balances— this will impact your score, and It can take some time to get back on track, but it is doable —you just need to stay consistent.I think it’s a good reminder for everyone listening: you’re not stuck with a bad score forever. It might take some effort, but it’s worth it in the end.Exactly, James. Whether you’re navigating credit challenges or just trying to maintain what you’ve built, every small step matters. So, for everyone tuning in, remember—it’s never too late to take control of your credit. And with the right plan, it’s absolutely doable.Well said. And on that note, I think we’re wrapping up today’s episode.We are. Thanks for joining us, everyone. Take care, and we’ll catch you next time on the Reliant Mortgage Solutions podcast.

Episodes

Understanding Your Credit Score