The best way to improve your credit score

Want to know how to improve your credit rating? It’s simple: Pay down your debt, don’t add more New debt and let your credit score drop until it’s gone completely.

Not the answer you expected? If you’re like most people, you’re probably shaking your head in disbelief wondering, How can I improve my credit rating by letting it die out? And don’t I need a credit score to buy a house?

Trust us: not having a credit score is a good thing, a very good thing! And you absolutely don’t need a credit score to buy a home. Keep reading and we’ll share more about it later.

Listen up: it’s time to get rid of your credit score once and for all. Are you intrigued? Good. Read on and we’ll explain exactly why you don’t have to worry about your credit score anymore.

What is a credit score?

A credit score is a three-digit number that tells banks and lenders how likely you are to repay your debt. A high score, usually 800 or more, is considered exceptional by most credit monitoring agencies. And a much lower score, usually 579 or less, is considered poor and will make it harder to borrow money.1

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Where does this number come from? Well, there are several credit reporting agencies that make up your credit score, and your score will be slightly different depending on where you look. FICO and VantageScore are two of the most popular.

But no matter what score you’re looking at, a credit score is really an “I like debt score.” Why? Because your credit score is really just a measure of how comfortable you are with mountains (and mountains) of debt.

Watch how this score is calculated and you will understand why.

How is a credit score calculated?

Calculating your credit score might not be as complicated as doing an old-fashioned long division (you know, with pen and paper), but it Is involve a few important factors.

According to FICO, there are five things that can impact your score:2

This is a thorough review of your entire credit history, taking into account any missed payments, debts in collection or filing for bankruptcy.

Turns out, the credit bureaus don’t like it when you use too much (or too little) of your credit. If you’re using most of your credit limit on your accounts, the bureaus might call you just because they think you’re in over your head.

  • Length of credit history (15%)

The offices look at how long you have had your accounts. This category is made up of how long your accounts have been created, how old they are, and how long you’ve used them.

The credit bureaus look at this because they want to know how many new accounts you have opened recently. If you don’t have a long history with credit, they will see that as a bad thing and affect your score.

This is a mix of the types of accounts you hold. Credit bureaus look at the type of debt you have: personal loans, credit cards, mortgages and more. Turns out they don’t really care what kind of debt you have – they just like to be curious about it.

No matter your credit score, there’s no indication that you’re good at money. A credit score doesn’t take into account important things (like your ability to balance a checkbook, stick to a budget, or invest in mutual funds). What a credit score really does is monitor how well you are able to borrow money (get into debt) and pay it back over your lifetime.

If you have a credit score north of 800, creditors can treat you like royalty and roll out the red carpet in no time. But here’s the catch: Your “higher” score in no way indicates that you’re actually good at managing money. It just means you’re good at borrowing a lot of money (and paying it back on time)!

How can I improve my credit rating?

If you want to know how to boost your credit score the “traditional” way, here’s what the credit bureaus like to see:

  • Pay your bills on time
  • Pay off the debt
  • Have a balance below your credit limit
  • Dispute inaccuracies

But remember, all they care about is lining their pockets. They know that by dangling you a three-digit number and telling you your world should revolve around it, they can keep you stuck in the cycle of debt.

We’ve said it before, and we’ll say it again: the best way to really boost your credit score is to ditch credit altogether. Quiet, credit score, you’ve been dumped! Don’t tell the credit bureaus, but your financial success depends on the numbers in your bank account, not the numbers in your credit report. Crazy right? (Not really.)

The only way to truly improve your credit score is to pay off your debt and commit to a debt-free lifestyle now. More loans. No more credit cards. No more borrowing money for things you can’t afford.

As you build your own financial security, you may see your credit score begin to decline. But don’t panic. . . That’s actually when it’s time to celebrate. And once these numbers disappear totally, it means you have succeeded. The true measure of financial success will be when your score reads indeterminable and you have money in the bank, your retirement accounts are fully funded, and you live and give like no one else. Welcome to your new life of debt freedom and financial security.

Oh, and don’t worry about a credit score when it comes time to buy a new home. You don’t need a stinky credit score for that either (despite what people might tell you). There is a process called manual underwriting that reviews full image of your financial stability, rather than just your credit score. See? You can breathe easily.

Although the numbers on your report become meaningless, you’ll still want to keep an eye on your credit. Unless you have all your money buried in the garden (don’t), identity theft and debit card fraud can always catch you off guard. It’s important to read your credit report once a year to make sure no one has tried to sneak anything out of you. Obtain a free copy of your credit report from one of the three major credit reporting agencies – Equifax, Experian and TransUnion – each year to check for suspicious activity.

So, instead of wondering how to raise your credit score a few points, start focusing on building wealth and securing your financial stability for the future of your dreams. It’s a much better way to spend your time. Here’s how:

How can I build wealth without a credit score?

Rather than focusing on the things you can not do without a credit score (like going into debt), think about the things you box do when you are finally free of monthly payments and you have no debt. Have you always wanted to take a backpacking trip to the south of France? Have you ever wanted to invest in the stock market so you can retire the way you want? Or have you thought about saving for your child’s college education?

Well, when you’re not sending a third (or more) of your paycheck to creditors for all the loans you’ve taken out, you’re free to do whatever you want with your income, including investing for the future and give generously .

Ready to live without a credit score?

Spoiler: Improving your credit score doesn’t involve opening another credit card account or taking out a risky loan on a shiny new car. Remember, if you’re looking to improve your credit score, the best thing you can do is pay off all your debt and say goodbye to your score.

Giving up your credit score is just one step on the road to financial peace. Not sure how or where to start? Check out our starter assessment. We’ll help you figure out where you are with money now so you can get to where you want to be: managing your money like a pro! Then dive into Financial Peace University. This is our nine-lesson course on how to get out of debt, save for emergencies, and take control of your money once and for all.