There are a few quick methods to improve your credit score if it is lower than desired. If the reason for the low score is identified, it is possible to increase the score by up to 100 points quickly.
This is particularly beneficial for individuals with scores in the “fair” and “bad” ranges, as they may see a significant improvement.
Those who are dealing with a low score have an advantage over those with a strong credit history as they have more room to increase their score rapidly.
Here are some strategies to quickly improve your credit score.
1. Pay credit card balances strategically
Your credit utilization is the percentage of your available credit that you’re using at any given time, and it has a significant impact on your credit score. In general, it’s best to keep your credit utilization below 30%, and the lower you can keep it, the better it will be for your score. Some people with the highest credit scores use less than 7% of their available credit.
It’s important to keep your balance low when your card issuer reports it to the credit bureaus, as this is what is used to calculate your credit score. To keep your balance low, you can pay down the balance before the end of the billing cycle or make multiple payments throughout the month. This will help ensure that your credit utilization stays low and your credit score stays high.
It’s worth noting that credit utilization is calculated for each credit card individually, as well as for all of your cards combined. So even if you have several credit cards with low balances, if one card has a high balance, it could negatively impact your credit utilization and score. In this case, you may want to consider transferring some of the balance to another card with a lower balance to improve your credit utilization and score.
2. Ask for higher credit limits
Increasing your credit limit can potentially have a positive impact on your credit score, as it can lower your overall credit utilization ratio. This ratio is calculated by dividing the amount of credit you’re currently using by the total amount of credit you have available. For example, if you have a credit limit of $10,000 and you’re currently using $3,000 of that limit, your credit utilization ratio is 30%.
It’s important to note that even if you don’t plan on using your increased credit limit, you should still be cautious not to overspend and carry a high balance, as this can lead to increased debt and financial trouble. In addition, requesting a higher credit limit may result in a hard inquiry on your credit report, which can temporarily lower your credit score.
If you have a good payment history and credit score, and your income has increased, you may be more likely to be approved for a higher credit limit. Some credit card issuers may also periodically review your account and proactively offer a credit limit increase. If you do receive a higher credit limit, it’s important to continue to use credit responsibly and avoid overspending, to maintain a healthy credit score.
3. Become an authorized user
One way to improve your credit utilization is to become an authorized user on a relative or friend’s credit card account with a high credit limit and a history of timely payments. This is also known as “credit piggybacking”. When you become an authorized user, the account will appear on your credit report and the credit limit of the card can help to lower your utilization.
The advantage of being an authorized user is that you can benefit from the primary user’s positive payment history without having to use the card or even have access to the account number. However, it is important to make sure that the primary user is responsible with their credit card usage. Any negative activity on their account could also appear on your credit report and potentially harm your credit score.
It’s important to note that not all credit scoring models take authorized user accounts into consideration, so it’s important to do your research and check if this will actually help your credit score. Additionally, if you do choose to become an authorized user, make sure to monitor your credit report regularly to ensure that there are no errors or negative information being reported.
4. Pay bills on time
Making late payments can have a negative impact on your credit score, and it’s crucial to pay your bills on time to avoid damaging your credit. Late payments can stay on your credit reports for up to 7 and a half years, which can severely hurt your credit history and make it difficult to obtain credit in the future.
If you miss a payment by 30 days or more, you should immediately contact the creditor and explain the situation. You can pay the bill as soon as possible and ask if the creditor will consider not reporting the missed payment to the credit bureaus. Even if they refuse, it’s still worth paying the bills as soon as possible because every month that an account is marked as late on payments can negatively affect your credit score.
It’s important to note that if you have a good history of on-time payments, a single missed payment is less likely to have a significant impact on your credit score. However, it’s still essential to make sure that you pay all your bills on time and avoid missing any payments.
5. Dispute credit report errors
Your credit score can be negatively affected by inaccuracies on your credit reports, which happen more often than you might think. To quickly improve your credit, it’s important to dispute any credit report errors you come across. You can obtain a free credit report from each of the three main credit bureaus, and it’s important to check them for mistakes, such as incorrect late payment marks or someone else’s credit information being included in your report.
If you spot any errors, it’s essential to dispute them with the credit bureau. This process can be done online, by mail, or over the phone. Once the bureau receives your dispute, they have 30 days to investigate it and respond. In some cases, the disputed information may be removed from your credit report if it’s found to be inaccurate.
It’s important to remember that disputing credit report errors is a critical step in improving your credit, and it’s worth the effort to ensure that your credit reports are accurate.
6. Use a secured credit card
Secured credit cards can be a great option for people looking to build or rebuild their credit score. As the name suggests, these cards require a cash deposit that serves as collateral for the card. This deposit is typically equal to the credit limit on the card. So if you deposit $500, your credit limit will be $500.
Secured credit cards are useful for those who are struggling with a low credit score or have no credit history. When you use a secured credit card, your on-time payments are reported to the credit bureaus, just like with a traditional credit card. This helps you establish or improve your credit score over time.
While secured credit cards can be a good option, it’s important to choose one with reasonable terms and fees. Look for a card with a low annual fee and a low interest rate. And be sure to make all of your payments on time, as missed or late payments can have a negative impact on your credit score.
With responsible use, a secured credit card can help you build a solid credit history and eventually qualify for an unsecured credit card with better terms and benefits.
7. Add to your credit mix
Adding another credit account that is in good standing can be beneficial for your credit score, especially if it’s a type of credit that you don’t already have. For instance, if you only have credit cards, then it may be a good idea to get a loan, such as a credit-builder loan, which can be a low-cost option. It’s essential to check that the loan you’re considering adding reports to all three credit bureaus.
On the other hand, if you have only loans or a few credit cards, getting a new credit card can be helpful. Not only can it improve your credit mix, but it can also lower your overall credit utilization by providing more available credit. It’s important to note that you should be careful not to apply for too much credit at once, as that could negatively impact your credit score.
When it comes to improving your credit mix, having a mix of credit accounts such as credit cards, loans, and mortgages can be beneficial for your credit score. However, it’s important to only take on new credit accounts that you can handle responsibly and pay on time.
