How to Increase Your Credit Score Quickly
Improving your credit score can seem like a daunting task, but with some discipline and smart financial habits, you can see significant increases in your score in as little as a few months. A higher credit score means better interest rates on loans and credit cards, and more opportunities when applying for mortgages, car loans and other lines of credit.
While long-term financial responsibility is the key to good credit, there are steps you can take right now to give your credit score a boost. Here is a comprehensive, step-by-step guide on how to quickly increase your credit score.
Check Your Credit Report for Errors
Before you do anything else, it’s important to check your credit report for any errors that may be negatively impacting your score. You can obtain free copies of your credit report from each of the three major credit bureaus – Equifax, Experian and TransUnion – every 12 months from AnnualCreditReport.com.
Go through each credit report carefully, looking for any inaccuracies:
- Incorrect personal information – Make sure all your personal information is correct, including name, address, Social Security number and employment history. Even small errors like a misspelled name or old address can hurt your score.
- Accounts that don’t belong to you – You may find accounts on your report that are not yours and need to be removed. This usually happens as a result of identity theft or reporting errors.
- Mistakes in your payment history – Check that all your accounts show on-time payments when you know you paid on time. If payments are incorrectly reported as late, you’ll need to get this fixed.
- Incorrect balances – Make sure the balances listed on each account match your records. Even small discrepancies can lower your score if they make it look like you owe more than you actually do.
If you find any errors on your credit reports, dispute them with the respective credit bureau right away. They are required by law to investigate disputed items within 30 days. If they can’t verify the inaccurate information, they must remove it from your credit report, which can increase your score.
Pay Down Revolving Account Balances
After ensuring your credit reports are error-free, the next step is targeting those revolving account balances. Revolving accounts include credit cards, lines of credit, and retail store cards. Your credit utilization ratio, which is the percentage of your total revolving credit limits that you’re currently using, makes up a significant portion of your credit score.
The lower your credit utilization ratio, the better. Experts recommend keeping your credit utilization below 30%, and below 10% is even better for your score.
So paying down your revolving account balances can substantially boost your credit utilization and credit score, especially if you can get several balances down to zero. Make a list of your credit cards and other revolving accounts and focus on paying down the balances as much as you can, as quickly as you can.
Limit New Credit Applications
It may be tempting to apply for several new credit cards to increase your available credit, but opening multiple new accounts in a short period can actually hurt your credit score. That’s because each credit application triggers a “hard inquiry” on your credit report, which can lower your score, especially if you have several within a few months.
Limit new credit applications to one card every six months or less. To help your score, make sure the card you apply for is one you’ll continue using responsibly for a long time. Getting approved for a new card can give your credit score an initial boost, but if you want your score to keep rising, focus on positive credit management rather than opening unnecessary new accounts.
Become an Authorized User
If you have a spouse, partner, family member or friend who has excellent credit and responsible credit card habits, see if they’re willing to add you as an authorized user on one of their credit card accounts. As an authorized user, the primary account holder’s entire payment history will be added to your credit reports, which can give your credit score a noticeable boost.
Just make sure the card issuer reports authorized user activity to the credit bureaus. Also, be aware that if the primary cardholder maxes out the credit card or makes late payments, that activity will negatively impact your credit score as well.
Limit New Credit Applications
It may be tempting to apply for several new credit cards to increase your available credit, but opening multiple new accounts in a short period can hurt your credit score. That’s because each credit application triggers a “hard inquiry” on your credit report, which can lower your score, especially if you have several within a few months.
Limit new credit applications to one card every six months or less. To help your score, make sure the card you apply for is one you’ll continue using responsibly for a long time. Getting approved for a new card can give your credit score an initial boost, but if you want your score to keep rising, focus on positive credit management rather than opening unnecessary new accounts.
Consider Taking Out a Credit-Builder Loan
If you need to establish or rebuild your credit history, applying for a credit-builder loan can be a smart move. These loans work a bit differently than traditional loans – the lender places the loan amount in a savings account for you. You make fixed monthly payments, and once the loan is repaid, you get access to the money that has accumulated in the savings account.
Credit-builder loans help you build credit because the lender reports your on-time monthly payments to the credit bureaus. Responsibly taking out and repaying one of these loans over time demonstrates you are capable of managing credit and paying back debts, which boosts your score.
Just be sure to work with a legitimate lender and understand all the loan terms before signing anything. Interest rates and fees can vary substantially between credit-builder loan providers.
Optimize Credit Card Usage
Managing your credit cards responsibly is one of the fastest ways to increase your credit score. To maximize your credit card impact:
- Make payments on time – Set up autopay or calendar reminders so you never miss a payment due date or pay late. Payment history is the most important factor in your credit score.
- Keep balances low – Keep credit utilization below 30% as explained above, with lower being better. Pay off high balances aggressively.
- Avoid maxing out cards – Even occasionally maxing out cards can significantly ding your score. Leave plenty of available credit.
- Use different cards periodically – Keep old cards active by using them every few months. Having a mix of credit types and ages raises your score.
Sticking to these credit card best practices demonstrates responsibility with credit and leads to rapid credit score improvements. Check your score every two to three months to monitor the positive impact of your optimized credit card habits.
Dispute Negative Items When Possible
Late payments, collections accounts, foreclosures, and bankruptcies can stay on your credit report for up to 7 to 10 years and severely lower your credit score, especially when recent. If you have any negative items on your credit from financial mistakes in the past, it’s worth seeing if you can get them removed or improved.
- Goodwill letters – Write directly to creditors to request removal of negatives based on past financial hardship. If they agree, they must notify the credit bureaus.
- Dispute errors – If a negative item is reported in error or you have proof it is inaccurate, file disputes. Credit bureaus must investigate.
- Negotiate pay-for-delete – Offer to repay collections accounts in exchange for removal from your credit reports. Get any deals in writing.
The more recent and severe the negative item, the more impact disputing or removing it can have on raising your credit score. Resolving older items also helps, just to a lesser degree. It’s worth the effort to clean up your credit history.
Become an Authorized User
If you have a spouse, partner, family member or friend who has excellent credit and responsible credit card habits, see if they’re willing to add you as an authorized user on one of their credit card accounts. As an authorized user, the primary account holder’s entire payment history will be added to your credit reports, which can give your credit score a noticeable boost.
Just make sure the card issuer reports authorized user activity to the credit bureaus. Also, be aware that if the primary cardholder maxes out the credit card or makes late payments, that activity will negatively impact your credit score as well.
Wait for Time to Pass
The simple passage of time can improve your credit score in a few ways:
- Older negative items decay – As negative information like late payments gets older, it impacts your credit score less. The more time that passes, the higher your score.
- Average account age rises – The average age of all your credit accounts is factored into your score. Keeping old accounts open increases your average account age.
- Hard inquiries fade – Hard inquiries from applying for credit fade from your report after two years, so old inquiries stop impacting your score.
Avoid new negatives and let the power of time work in your favor. You may not even need to apply for new credit. Within six months to a year of responsible habits, your credit score can improve significantly.
Sign Up for Credit Monitoring
To track your credit score progress and catch any potential issues early, sign up for free credit monitoring services. Credit monitoring gives you online access to your latest credit reports and scores and alerts you to key changes like new accounts or missed payments.
Monitoring services like Credit Karma and WalletHub also give you credit improvement tips tailored to your specific credit situation. Staying on top of your credit should motivate you to keep making positive changes and build your score.
Frequently Asked Questions
Q: How quickly can you raise your credit score?
A: By following responsible credit habits, you can typically see your credit score begin increasing within one to three months. With diligent effort, most people can raise their scores significantly within six months to a year. In some cases, you may be able to see a credit score improvement in just one to two months.
Q: What’s the fastest way to increase your credit score?
A: The fastest ways to increase your credit score are paying down high credit card balances to lower your credit utilization ratio, becoming an authorized user on someone else’s account to add positive history, and disputing or removing inaccurate negative items if possible.
Q: How can I raise my credit score 100 points fast?
A: To raise your credit score 100 points or more, focus on getting all revolving account balances below 10% of the credit limit, become an authorized user, limit hard inquiries from new credit applications, and correct any errors on your credit reports through disputes. If you have major negative items, try goodwill letters.
Q: What can I do immediately to raise my credit score?
A: The most effective things you can do immediately are paying down credit card balances, becoming an authorized user, and disputing negative errors on your credit reports. Limiting new credit applications and optimizing your credit card usage also provide an instant boost.
Q: How long does it take to raise your credit score 50 points?
A: Raising your credit score 50 points or more may take between two to six months depending on your starting point. To maximize your chances, focus on the strategies above like lowering credit utilization, becoming an authorized user, disputing errors, and optimizing credit card usage for at least three to six months.
Q: Can I increase my credit score 100 points in 6 months?
A: Yes, an increase of 100 points or more within six months is certainly achievable through diligent credit improvement efforts. Shoot for lowering revolving balances significantly, becoming an authorized user, disputing all errors, and not taking on new debt during that time period.
Q: What credit score increase is considered good?
A: Any credit score increase is good, but most experts consider an increase of at least 50 points within six months to a year to be excellent credit score improvement. Increases of 100 points or more indicate you have made outstanding strides in optimizing your credit.
Conclusion
Improving your credit score significantly in a short period of time takes diligence and adopting smart financial habits. The most effective strategies include lowering credit utilization, becoming an authorized user, disputing errors, optimizing credit card usage, and letting time pass.
Focus on implementing the step-by-step tips provided in this guide, and you will be surprised at the credit score increase you can achieve in just six months. Monitor your score regularly and continue your new good habits long-term. With consistent effort, you can reach and exceed your credit score goals.
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