My credit score went up, but not because I'm better with money

In our culture of money, we tend to treat a credit score as a measure of how “responsible” we are. Creditors and lenders use this number to determine whether to trust us with debt, so it must signify whether we’re good with money.

But “responsibility” isn’t a fair characterization of what a credit score measures. A better way to describe it is a measure of your willingness and ability to be the kind of customer a creditor or lender wants.

A credit score lets financial companies know whether they’ll likely make money if they accept your business.

What gets reported (and what doesn’t)

A credit score can never be a useful measure of your level of financial responsibility, because it doesn’t measure all your financial activity.

Your credit history includes: applications for credit cards and loans, credit card balances, on-time or missed debt payments, unpaid utility bills, some unpaid medical bills and negative debt status like default. It doesn’t include: on-time rent payments or utility bill payments, income or employment status.

The way credit is calculated creates a clear disadvantage for low-income and low-wealth communities. If you rent because you can’t build savings for a down payment, you miss out on the phenomenal credit-building power of a mortgage — even if you’re reliably paying as much or more in rent each month as you’d owe toward a mortgage. The system sets up low-income and low-wealth communities for a cycle of low access to the wealth-building power of credit and debt.

In this way, a credit score is a much better measurement of your access to money than your ability to manage it responsibly.

How I raised my credit score 250 points 

Throughout my 20s, I buried my head in the sand about my debt. I was living on poverty wages, and I had student loans and credit card debt in default, no idea how to approach them and no clue how to know their impact on my credit score.

I checked my credit score for the first time at age 30, and it was a meager 528. (Anything below 580 is considered “poor,” the worst rating.) Within a year, I’d pull that up over 670 (a “good” rating); within five years, I’d get it over 720 (a cutoff for many lenders); and today, eight years later, it sits at over 770 (”excellent”).

I haven’t become more responsible with money in that time. Many experts might consider my approach to money management less responsible, and I’ve dealt with even more debt in the meantime.

The secret that boosted my score quickly and set me on a path to a laudable credit rating? I had $200 to spare.

A poor credit score combined with limited access to resources is a tough situation to get out of. A low score makes it impossible to access credit or loans that could give you a boost in times of lean income, and lean income makes it impossible to take most recommended steps to raise your score. That was my situation for years as a struggling writer — until I landed my first full-time, salaried job.

With that job, I had disposable income for the first time in my life, which meant I had options for dealing with my credit history that weren’t available before.

I used $200 and opened a secured credit card, which requires a cash deposit and starts with a limit equal to that deposit. I had written off ever opening another credit card because of my previous debt, but I discovered it’s one of the quickest ways to build credit. Just a few months after opening this card, my credit score went up 100 points. I don’t remember even using it in that time; just my willingness to take on credit made me instantly a more attractive customer for creditors. A few months later, my credit limit was raised, I got my deposit back and I joined the ranks of, apparently, “responsible” credit card users everywhere.

When I had my lowest credit score, I wasn’t less responsible with money than I am now. I paid all my bills and rent on time every month, even on my low income. I could stretch a dollar around the block to meet my financial commitments. I borrowed money from family and friends to buy cars and paid it back in installments. I was, in fact, a responsible borrower, but that information never reached my credit report.

When I started working full time, I didn’t change how I manage money. I just had more money to use. And that, ultimately, made me the kind of person a creditor wants to work with.