Here's What Happens When Your Credit Score Rises by 100 Points

A lot of people don't really stop to think about their credit score until they're ready to apply for a loan or credit card. But that three-digit number could actually make a huge difference in your finances. That's why it's best to try to do what you can to raise your credit score.

Of course, not everyone has to make that effort. If your credit score is an 825, there's no need to stress yourself out to bring it up to a perfect 850. For most lenders or credit card issuers, there's no difference between those two numbers since they're both super high.

But if your credit score is a 650, that's only considered "fair," according to Experian, one of the three credit bureaus. Raising it by 100 points to a 750 would propel you into the "very good" category. And from there, borrowing money could get both easier and less expensive.

The benefit of a 100-point credit score boost

A higher credit score could do a lot of good things for your finances. It could:

• Make it easier to get approved for a loan
• Snag you a lower interest rate on a loan that results in lower monthly payments
• Help you get approved for outstanding credit card offers -- the ones with the best sign-up bonuses

Here's one example of how a higher credit score could help you. Let's say you're applying for a $300,000 mortgage. If your credit score is 650, you could end up with a 7.385% interest rate on a 30-year loan, says myFICO. That results in a monthly payment of $2,074.

But if your credit score is 100 points higher, or 750, you may be eligible to sign that loan at 6.564%. That brings your monthly payment down to $1,909, allowing you to save $165 a month, or almost $2,000 a year. That's a huge difference.

How to raise your credit score by 100 points

It's important to be realistic when it comes to boosting your credit score. For the most part, a 100-point increase isn't going to happen overnight. It could take months for your score to improve to that degree. But don't let that discourage you.

Two of the most effective ways to raise your score are by paying all bills on time and paying down credit card balances. For the latter, your goal should be to get your outstanding credit card debt to 30% of your total credit limit or less. So if you have four credit cards with a total spending limit of $10,000, you'd ideally want your balance to be no more than $3,000 (and the lower the better, since it'll mean not losing as much money to interest).

But there are some other steps you can take to boost your credit score, too:

• Check your credit report every few months for errors
• Get a credit card limit increase, but don't add to your balances (this could get you to that 30% limit even if you're unable to whittle your debt down all that much)
• Open a secured credit card and pay it off monthly
• Get added as an authorized user to a relative's long-standing credit card account (but make sure the primary cardholder has a solid payment history and pays their bill on time every month)

While a 100-point credit score boost takes time, the upside can be huge. So do your best to raise your score by 100 points if it could use work. And if it's already in pretty good shape -- say, in the mid-700s -- worry less about a full 100-point boost, and instead just try to raise it as best as you can.