I’ve gone through the process of improving my credit score and I’ve also helped my husband and several friends do the same. Working on your credit to reach an 800 credit score can be both frustrating and very rewarding.

Figuring out what works to raise your credit score takes a bit of effort, reliable resources, and time. The things you need to do to increase your credit score to 800 are well documented and anyone can do it. In this video and blog post I’ll share what I’ve learned about raising my credit score to 800 and how I used credit cards to do it.

Learn About Credit Scores

You are probably starting off with a bad or non-existent credit score so the world of credit seems mysterious and unknown. Luckily while the exact formula is not public information, the general knowledge of how to increase your credit score is well know.

Learning about credit scores and how credit works will help you raise your score on your own or find the right person to help you do it. If you’re new then reading up about how to improve credit is a great place to start. I’ve share multiple posts about credit scores that can help get you start:

• Why having a good credit score matters
• What makes up a credit score
• How to improve your credit score

There are no real secrets to credit repair and anyone can do it with a bit of self-education. Most of the things that increase your credit score are actually just solid financial principles likes paying down old debts and not spending more on credit than you can afford to pay.

Figure Out Your Why

Credit scores and even the use of credit can be controversial in the personal finance world. Some people are for it, some are against it, and others like me accept it as part of our current system as a tool we can use to better our life.

Credit scores are important to regular people living their lives for a number of reasons from buying a car to purchasing a home to even getting better rates on insurance. There are a number of reasons in life why you might want a good credit score and thinking about your own personal reasons will help you during this process.

For example, knowing you need to increase your credit score to finally purchase a home of your own is much more motivating than just the general idea of having good credit.

In this step you can also decide if you really want to pursue a good credit score or not. Most of the things you can accomplish with good credit can also be done with no credit at all as well. However, you need to pick one route or another because ending up in the middle without a plan leaves people with bad credit that hurts more. You need to think about why you want good credit and then either commit to having the best credit possible or no credit score at all. Either option is valid but you need t commit to what is best for your situation.

Open New Credit Strategically

Opening new credit can boost your credit score if it’s done in the right way. You need to have a strategic plan for opening new credit so that doing so helps you and raises your credit score instead of pushing you in the wrong direction.

Building your credit by opening multiple new lines can actually hurt you if you do it all at once. Instead of running out and opening multiple new credit cards at once, you’ll want to do one now and wait a few months until making your next move.

Opening credit for the first time can be done by getting a commonly offered card or even getting a secured card if you can’t get approved for another. A secured card is where you put down a deposit in order to have a credit line equal to the amount of the deposit. This protects the credit lender and allows you to build a history with credit.

Because you won’t be opening all your new credit lines right away you’ll have to accept a longer term perspective for increasing your credit score to 800. It won’t happen overnight and depending on your starting point it could even take a couple years. This is where having a reason why and having a purpose will keep you on track.

Using Credit Cards Wisely

How much credit you are currently using will affect your credit score. If you are only using a small percentage of the credit you could be using then your score will be higher.

Having a good credit score doesn’t mean you need overwhelming amounts of debt. In fact, having large debt balances usually hurts your credit score because of the credit utilization factor. You never, ever want to max out your credit cards because doing so will hurt you and your credit score.

Your credit utilization is the balance of your debt compared to the available credit you have access to. This contributes 30% to FICO score’s calculation which means it is something you need to work on asap. 

The goal here is to pay off debt while still keeping your credit limits high. This lowers the amount of credit you are using compared to the amount you could actually use. 

Keeping your credit utilization low will involve several things:

• Paying down existing balances – Keeping your debt levels on credit cards lower will help you keep your credit score high. If you have high existing balances your first move will be to pay those down.
• Use your cards with bills not spending – Personally I recommend most people don’t use credit cards for day to day spending because it usually gets out of control and leads to debt. The best way to do it is just charge a bill or two to your card so it’s active and being used but not hitting 30% use (I find 10% or less to be effective).
• Increase credit card limits – Another way to help utilization is to increase the amount of credit you have access to that you are not actually using. A great way to do this is to increase your credit card limit by asking the company to raise it.
• Pay your bill on time once it’s been reported to the credit bureaus – Every lender reports their existing balances to the credit bureaus at different times. This is a critical thing for you to know because you want to make sure you pay your bill before it’s overdue but after it’s been reported so it will help you credit score. While it’s normally around the statement date, the best way to find this date for each card and lender is to ask them directly.
• Never max out your cards – This has been mentioned throughout the post but you do not want to max our your cards when trying to increase your credit score. This will just hurt your score.

Apply for New Credit As Needed

Having multiple accounts open for long periods of time can help your credit score but that doesn’t mean more is better.

You don’t need to open 25 different accounts to get a good credit score. In fact I have less than 10 and have an excellent credit score.

Be selective in the credit lines that you open. Don’t max yourself out with too many new open lines of credit. It will drop your credit score temporarily and it could potentially put you in a precarious situation.

If you are in a credit building stage, then you should work on opening new cards strategically over time but never all at once. Wait 6 months or more between opening new credit lines.

Don’t Obsess Over The Score Daily

It might be tempting to pay someone to help improve your credit score quickly, but be cautious of these services. Many are not helpful but take your money for something you can do yourself.

You can improve your credit score over time by following common sense credit guidelines and getting on a budget.

The less you obsess about your credit score the better off you will be.  Ultimately a credit score isn’t the most important thing in your financial life and there are ways to operate around a bad credit score or no credit score at all.

If you are planning to use credit less and don’t need it for a future mortgage or car loan or new job then your credit score will be less important.

Remember that even if you are planning to use credit in the future, you can work with what you already have, pay things on time, use credit responsibly, and build your credit score from there.

I used to hate credit cards. Hate. Hate. HATE.

When I was paying off credit card debt right after college I hated those cards so much that I couldn’t bring myself to use them at all. I didn’t understand how anyone could say they actually liked using their credit cards… it just didn’t make sense!

Credit card debt can be one of the worst types of debt because the high interest rates make it very hard to get out. When you are paying 24% interest on your debt you have to work much harder than if you are paying 2%.

When I was paying back credit card debt I was very much in alignment with Dave Ramsey – I hated credit cards and planned to never use them again. Cancel them! Cut them up! Never again!

Obviously, after I moved past the trauma of paying off credit card debt I eventually changed my mind and saw credit cards for what they can be: a tool to help you financially when used responsibly.

Why I Love Credit Cards Now

Now that I’m free of credit card debt I love credit cards and credit cards are the main reason why I have an 800 credit score.

I’ve been using my credit cards responsibly for several years now and haven’t missed a payment or paid interest again. During that time I’ve also gotten thousands of dollars in free travel and cash back rewards. Thanks to responsible credit card use I’ve benefitted far more than I was hurt by credit cards.

The credit cards are paying me now instead of me paying them. It’s a huge lesson – if you are smart with your money you get rewarded, but if you are dumb you are penalized.

If you are smart with your money you get rewarded, but if you are dumb you get penalized. 

That basically sums up credit cards in a nutshell even if there is more behind the psychology of it where credit card companies work to make you spend. If you can be responsible you will be rewarded, and if you can’t then you will be penalized.

That means you need to stick to some very important but sometimes hard too follow truths:

• If you don’t have the actual money to pay for something then don’t use a credit card.
• If you don’t trust yourself then don’t use a credit card. If you know you will overspend then don’t carry a card.
• Use your credit cards for increasing your score and other benefits, not to spend more on a lifestyle you can not afford.

Credit cards can be good. You just have to be smart.

I’m under no illusion that I’ll get rich off using credit cards. That is often the thing mocked by certain financial gurus who are anti-credit card. I know I won’t get rich from using them and there are potential downfalls, but if you use credit cards wisely then you can be rewarded in small ways and also increase your credit score too.

Reasons To Use Credit Cards

There are actually more reasons to use credit cards than to not use them. If you’ve been wondering why anyone would use a credit card over a debit card, check out all of these reasons to use credit cards:

• One time sign up bonuses (often hundreds of dollars)
• Cash back rewards for spending
• Reward points for travel for spending
• Frequent flyer miles with your favorite airline
• Safety protections from fraud
• Protection from bad or dishonest vendors
• Grace period before money leaves your bank account
• Insurance and consumer protections from the company
• Builds your credit history and raises your credit score
• Easy spending tracking with less effort
• Free credit score monitoring

There are even more rewards and benefits that cards may offer but these are some of the biggest ones that are reasons why you might want to use credit cards!

When Credit Cards Can Help You

In order to use credit cards responsibly you have to be aware of when and how you are using them. Swiping a credit card without thinking is a slippery slope that might start off ok but can end in a credit card debt disaster.

Credit cards can help you, but only when these things are true:

• When you know your credit score.
• When you use them responsibly.
• When you pay off balances at the end of each month.
• When you use credit cards for expenses you can afford.
• When you use credit cards that offer rewards.
• When you use credit cards to slowly build your credit score.
• When you use credit cards to get extra protection.
• When you don’t buy more than you can afford.
• When you save more or get a store discount.
• When you sign up for a credit card to get a killer bonus.
• When you tae advantage of special offers from credit cards.
• When you get a good balance transfer deal to save money.
• When you use credit cards to reach a goal.
• When you use them to better keep track of spending via Mint.

I might have hated credit cards in the past, but I love them now! There are lots of situations where using credit cards can be a good thing and I’ll forever advocate for wise credit card use.

If you feel like you can’t handle credit cards and always overspend, then that’s ok! Don’t use them. Don’t even tempt yourself with the possibilities of overspending. Either cut up the cards so you can’t use them or cancel them entirely. You don’t have to use credit cards and should never use them if you know it will lead you to a bad space financially or mentally.

Learn More About Credit

If you are using credit cards then you should also make sure you learn about and understand credit scores. Here are a few posts to help with that:

• Why having a good credit score matters
• What makes up a credit score
• How to improve your credit score
• How To Raise Your Credit Score With Credit Card Use

I’ve shared a lot about our first home purchase from the starter home purchase price to the easy ways we were paying it off faster to drop PMI.

Now I’m sharing the next phase in our home ownership journey: our mortgage refinance.

Our Home Refinance Trigger

When mortgage rates dropped to low levels in the middle of the pandemic during 2020 we decided it was finally time to start a refinance of our loan.

We bought our home in 2016 and had been paying $99 a month in mortgage insurance premiums every single month since then. We had not found an opportunity that made since to refinance previously because we had a decent rate at 3.625%. The few times I looked into refinancing the interest rate was not low enough to give us any financial benefit.

Once interest rates started dipping below 3% I knew it would be a good time to refinance for us because we might finally be able to get a deal good enough to break even from closing costs within a reasonable time frame.

While the pandemic of 2020 is tragic in many ways it was a great financial opportunity as far as interest rates on mortgages went.

Shopping Mortgage Refinance Offers

Once I wanted to refinance I knew it was time to shop around and find the best mortgage refinance offer.

To compare the offers I made sure to look at several things:

• the new interest rate compared to my rate
• the new payment compared to my payment
• the total amount of closing costs
• when I would break even based on closing costs

Those were the most important factors. It makes no sense to refinance your mortgage if you aren’t getting a better deal that will start saving you money within a reasonable time frame, especially if the home is not your “forever” home.

I decided that I wanted the interest rate to be 2.75% and less than $2,500 in closing costs, and preferably a 15 year loan. I set out to find just what I wanted!

I began with Rocket Mortgage / Quicken Loans because they were constantly advertising to me and I’d previously reached out and their loan officer straight up told me it wouldn’t make sense for us (I valued the honesty instead of trying to make a sale). However this time I got a different person and it was not a pleasant experience. They were the first I checked with but the rate was higher than I wanted (I wasn’t refinancing who was pushy and would not get the rate below 2.99% with over $4,000 in closing costs. When I explained their costs were higher than I wanted the sales person got pushy and tried to explain interest rates to me like I didn’t understand how much money I could be saving. I already knew I wasn’t going with them based on having the worst quote but that experience was rude but unfortunately likely works on people who aren’t as savvy who then end up paying more.

Because that first check on my credit had opened my mortgage shopping period I then checked with every single bank I could in my city as well as local credit unions. I figured if the larger national mortgage companies weren’t providing great service then I should turn to banks that were known for doing a better job.

I got about 10 different quotes and some got close to what I wanted but not quite. I went ahead and checked with the bank I already used for business checking because it’s a regional bank who’s been great to deal with so far. They ended up giving me the best closing cost quote: just $2,000. They also agreed to lock me in at 2.75% and wouldn’t go forward with the paperwork unless that was a sure deal. At the time I contacted them rates were bouncing back up to 3% but they assured me that they were there to get me what I wanted … and they did!

Our Mortgage Refinance Experience

Because of the low closing costs and great rate I went with Iberia Bank for my mortgage refinance. I figured they would likely sell my loan to a larger servicer but the deal for my mortgage was just too good to pass up.

Because I banked with Iberia already they allowed me to waive the appraisal of our home for the refinance. I’m not sure if that is 100% the reason or if it was also because of the pandemic or that they could look at real estate websites and conservatively estimate our house at an amount that would have us past 80% loan to value ratio.

We didn’t have to do an appraisal but we did have to still provide a lot of paperwork.

The video above shows the things you have to provide in order to refinance out of your FHA loan to a conventional mortgage during a refinance. Here are the things we had to provide during our refinance:

• two years of tax returns
• two years of W-2s
• last two paycheck stubs
• current mortgage statement
• current insurance information
• credit checks
• credit check explanation (for mortgage shopping)
• approval for no appraisal (you might have to do an appraisal)
• explanations for anything confusing (my work had to provide one)
• proof of identity

Even though you already “own” the home you are creating a new mortgage so it’s very much like the first time you buy a home. You have to provide a lot of paperwork and “prove” yourself in order to qualify. They want to know that you have the income and stability to pay this new loan.

Our refinance experience was interesting because they were so bogged down and busy during this period because many, many people were refinancing. We actually would go long stretches without hearing anything back from the bank. At points it felt like they had forgotten us but I knew they were overwhelmed and were working on it.

In the end the underwriting and everything went smoothly and we closed on our refinance in April 2020.

Our New Mortgage Details

Our new refinanced mortgage is pretty great in my opinion and it’s set up to let us pay our home off even faster than we had originally planned.

Here are the details for our new mortgage loan:

• New loan amount: $142,000
• Interest rate: 2.75%
• Loan term: 15 years
• Monthly principal & interest: $963.64
• Monthly payment: $1,292.96
• NO PMI

This fit all of the requirements I wanted when I set out to refinance our mortgage.

The break even for us was just under two years and we knew we planned to stay at least that long and potentially keep this house forever as a rental. With that in mind it was very exciting to be saving so much money in the long run and paying off this home much faster.

As you can see from the most recent mortgage payoff video in July 2020 we are already paying off the mortgage at a much faster rate.

Our new mortgage payment is $93 per month more than we were paying with our original loan each month yet we are more than doubling the amount we are paying toward our principal balance each month.

With this new refinanced mortgage loan we are starting off with our first payment sending $638.22 to reducing the principal of the loan and that number will only increase over time. In just 9 months we will be sending over $650 per month to reduce the loan balance.

This mortgage refinance has drastically increase how fast we will pay off this loan and reduced the amount of interest we will pay. Even if this is not our home forever I’m thrilled to see my money being used for equity instead of PMI and interest!

Your credit score is incredibly important for many reasons from buying a home to paying less on debt you do owe. People often use good credit to leverage their money and achieve more than those who have bad credit.

If you are wanting to improve your credit and reach a good credit score so. you can have more opportunities then you first need to know what makes up your credit score.

How To Get Your Credit Score

You can get your free credit score from Credit Karma here via my affiliate link. You can also get free scores from major credit card providers.

One thing to note is that Credit Karma and other free services offer your Vantage Score, not your FICO score. Most lenders use the FICO score as your credit score which means your free score you are tracking may be off. Based on what I’ve seen from hundreds of people it can be off anywhere from 2 points to 100 points depending on your credit profile.

If you want your accurate credit score that lenders will see then you have to pay for it. You can purchase your score from the consumer facing side of the FICO brand at My FICO. This is the only option to see your FICO score unless you are working with a lender who will let you see it in their portal.

You can get your FICO score at My FICO with plans starting at $19 a month, via this affiliate link and cancel when you don’t need it any longer.

What Makes Up Your Credit Score

The information in this post and video about what makes up your credit score is from Credit Karma. I chose to use Credit Karma as an example because it lays out the information well and makes it easy to understand. It’s also a FREE platform that has helped hundreds of thousands of people improve their credit.

According to their platform (and from what I’ve seen in improving my own credit score), your credit score is made up of these 6 factors:

1. Payment history
2. Credit card use (credit utilization)
3. Derogatory marks
4. Credit age
5. Total accounts
6. Hard Inquiries

As you will see, these factors also differ in how much they affect your score. Some will make more of an impact like payment history and others will make less of an impact like hard inquires.

Seeing 6 factors makes credit seem less overwhelming since you only have 6 things to work on improving.

Payment History

Payment history makes a huge impact on your credit score. It’s well known it contributes almost a third of your score so making sure you pay bills on time is incredibly important.

Even one late payment can injure your credit score and drop it by many points. It’s important that you always pay your bills on time and if you are late on any payments you make sure you try to correct or dispute it.

Remember that a single 30 or 60 day missed payment is easy to recover from in the long run but will initially hurt your score a lot. A 90 day missed payment can be so damaging it leads certain loans and lenders to disqualify you automatically. This is all calculated via a formula that includes all possible payments on all accounts so the more missed payments you have the worse it will be and the harder it will be to recover.

Lenders want to know that you will pay your bill on time so make this your highest priority when thinking about credit.

• Action steps: Set up auto pay for as many bills as possible and set calendar reminders for due dates to make sure things get paid on time.

Credit Card Use

Credit card use or credit utilization is the calculation of how much of your credit you are actually using. Credit card use is a good way to measure this because credit cards are a line of credit where you have access to a lot of credit and can use it – or not.

Credit card utilization matters most for each individual card but your score also takes into account the average use across all cards and lines of credit.

The goal is to stay under 30% of your credit used and 10% is ideal. You don’t have to carry credit card debt or pay interest in order to build credit. You can open a couple cards and charge just a small amount and pay it off every month.

• Action tip: Calculate your utilization rate for each credit card and then work on a plan to pay down balances to 10%.

Derogatory Marks

Derogatory marks like collections, bankruptcies, civil judgements and tax liens are all things that are negative and can negatively affect your credit score for a long time. These can stay on your credit report for 7-10 years so it’s best to avoid or remove them if possible.

Debt collections have to have proof that you own the debt and everything is accurate so you can work through the process of verifying, disputing, and settling your debt.

If it’s over a couple years old you may also just decide to let it fall off your credit report. The older a collections account is the less it will affect your credit score.

• Action steps: Make a list of all the derogatory marks on your credit report. Start working on improving them by using the “pay for delete” method for collections.

Credit Age

Credit age is another important factor because creditors like to know that you are going to be using credit wisely for a long period of time before they lend to you.

Experience handling credit is important and to show this you should always keep your oldest accounts open. I cringe when people pay off their credit cards then close the accounts because they hurts you so much in the long run.

Make sure you keep your oldest credit card open and use it for 1 small thing every since month so it is active and not auto closed.

• Action step: There isn’t much you can do here other than make sure you take out credit early and keep it active!

Total Accounts

The total number of accounts you have is another factor in your credit score but this one has a low impact on your actual score.

Having different type of accounts like credit cards and installment loans is a factor in your score. This is something people generally build over time as they open more accounts with different types of credit.

Personally I’ve seen that you generally want at least 2 credit cards in use and one installment loan in order to have the best credit.

• Action step: Make a plan to strategically increase your accounts by opening a new line, but don’t just rush out and open multiple at once!

Hard Inquiries

Hard inquiries are a factor in your credit score and while they have a low impact, having too many can drop your credit score.

Luckily unlike the other factors this is usually a temporary drop and will even back out after about three months.

As you can see from my credit score slide above, we recently applied for a new refinanced mortgage which is why we had more inquiries and our score dropped temporarily.

• Action step: Only apply for credit when you absolutely need it and try to plan ahead to minimize these inquiries in the year before you get a mortgage.

Building Your Credit

If you are struggling to build or repair credit then this should give you a good start to work on improving your credit. By focusing in on 6 different elements you are able to eliminate things that don’t matter but could waste your time.

I recommend you start from the top of the list and then work your way down. You will get the most improvement from your efforts if you focus on what affects your score the most. This means getting organized and making a plan to strategically pay off debts and increase your credit score!