Your credit score is a number that tells lenders how much risk they’re taking on by loaning you money. The higher your score, the less risky a borrower you appear, which could lead to not just getting approved for a loan or credit card, but snagging a more favorable interest rate.
Getting your credit score to rise by, say, 100 points could open a lot of doors for you on the borrowing front. But what about a 20-point increase? Will that make a difference? The quick answer is, it depends.
In some cases, you may not see an impact
In the context of FICO® Scores, the most commonly used credit scoring model in the U.S., here’s how credit scores are classified, according to Experian:
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- 300 to 579: Poor
- 580 to 669: Fair
- 670 to 739: Good
- 740 to 799: Very good
- 800 to 850: Exceptional
Let’s say you have a credit score of 810, and it rises to 830. That’s great and all, but from a borrowing perspective, it may not really change things. Chances are, any lender that’s willing to loan you money with a score of 830 would’ve also written you a loan at 810, since both numbers are excellent.
Similarly, let’s say you’re able to boost your credit score from a 530 to a 550. That’s a step in the right direction, but you might still struggle to borrow in general due to poor credit.
When a 20-point credit score increase does help
In some situations, boosting your credit score by 20 points could do a lot of good for your borrowing options. For one thing, it takes a minimum credit score of 620 to qualify for a conventional mortgage. So if you’re able to take a score of 605 up to 625, that puts you over that threshold. (Granted, it doesn’t guarantee that you’ll get your mortgage, as you may not meet the income requirements for your lender, but at least it makes you a viable candidate.)
Similarly, it’s not unusual for certain credit cards to come with a minimum credit score requirement. Unlike mortgages, there’s no blanket requirement. One card may require a minimum score of 680 while another may require a 700. And usually, the better the rewards, the higher the credit score requirement is. But this is another situation where a small boost to your credit score might actually have an impact.
Slow and steady wins the race
A single 20-point boost to your credit score may or may not affect your ability to borrow for the better. But remember, a series of 20-point boosts might do you a lot of good.
If your credit score rises from, say, a 640 this month to a 660 next month, and then a 680 the month after that, suddenly, your score has gone from fair to good. That might help you qualify for a loan you may have otherwise been denied.
For this reason, it’s a good idea to work on boosting your credit score. And one of the best ways to do so is to pay all credit card bills and loans on time.
For the former, you’ll be considered timely if you send in your minimum payment by its due date. But it’s best to try to pay off your entire balance each month. In fact, another way to boost your credit score is to have a low balance across your various credit cards relative to your total spending limit.
Finally, make a point to check your credit report for errors once every few months. Correcting a mistake could lead to a quick boost. You can request a free copy of your credit report once a week from each of the three reporting bureaus.
A single 20-point credit score boost may not be such a game-changer for you. But make it a series of 20-point boosts, and you may end up much happier with your borrowing options.
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