You know you need a good credit score to qualify for lower rates on mortgages, car loans and more. But what if your score isn’t where you need it to be? How can you raise your credit score fast?
The financial factors that contribute to your credit score aren’t always clear, and it’s far easier to damage your score than it is to improve it. Because of that, raising your credit score can seem like a daunting task. However, there are ways to improve your credit score, and therefore turn you into an appealing borrower in the eyes of lenders.
5 tips to raise your credit score fast
1. Pay off -- or at least pay down -- your balances
Paying off your balances might not be the easiest option, but the hard way could be the best for your credit score, according to John Ulzheimer, a credit expert formerly with FICO and Equifax.
“This is the most actionable way to improve your credit scores, fast,” Ulzheimer said.
Keeping your debt low and your available credit high is key to a good credit score. The best way to do this is to pay off your card’s balance in full every month.
If you currently carry a balance on your credit cards and can’t pay it off all at once, pay as much as you can to reduce your credit utilization. Credit utilization -- that’s how much debt you hold versus how much credit is available to you -- is the second biggest factor when determining your credit score.
To calculate your credit utilization, divide your total credit used (debt) by your total credit limit. If you have $3,000 in credit card debt and have access to $10,000 in credit, your utilization rate would be 30%.
The lower your credit utilization, the more it can improve your credit score. Your target ratio should be less than 10%, according to Ulzheimer, but anything you can pay to reduce your utilization can have an impact within 30 days.
He notes that paying off your balance won’t help your score much if you continue to place new charges on the card.
“If you use the card for new purchases at the same time, your credit reports will never be updated to show a zero balance,” Ulzheimer said. “The balances on credit reports are based on your previous month’s statement balance.”
2. Make on-time payments
Your payment history is the biggest factor when calculating your credit score, so ensuring you make on-time payments for credit cards, loans, mortgages and other bills is essential.
Building a history takes time, so this might seem like an unlikely fix. But even after a short period, you may notice a difference -- but that might be a bit of an illusion, according to Ulzheimer.
“Really what you’re doing is putting time between yourself and the dates of the missed payments,” he said. “It gives the impression that you’re improving your score by making payments on time when in reality you’re just allowing the bad stuff to age, which is why your scores would improve.”
Getting into the habit of making on-time payments is still a good idea, even if it isn’t a quick fix. If you have trouble remembering due dates, enrolling in autopay is an easy way to make sure you never miss a payment.
3. Request a credit limit increase
Asking for a credit limit increase on an existing card will improve your utilization rate, which should have a similar effect to paying off your balance. If you still have $3,000 in credit card debt, by getting your credit limit increased from $10,000 to $12,000, you’ll immediately reduce your credit utilization from 30% to 25%.
When you ask your credit card company to increase your credit limit, they may have to run a hard credit check to decide if you qualify. And although the hard inquiry could ding your score initially, the impact is minimal, according to Ulzheimer. And if you can increase your credit limit by a few thousand dollars -- without running up a higher balance -- you could immediately lower your credit utilization ratio and improve your score within a few months.
You should be able to request an increase online, but you can also call your credit card company to ask. It’s best to do this once you’ve demonstrated a pattern of healthy credit usage -- on-time payments for at least six months -- to increase your chances of being approved for a higher line of credit.
4. Apply for an additional credit card
Similar to increasing your credit limit on your current card, adding another credit card could improve your credit score by decreasing your credit usage. And if there’s a welcome bonus with the new card, you could benefit even more.
You’ll again face a potential temporary ding to your credit with a hard inquiry, plus adding a new account would decrease the average length of your credit history. But even that might be worth the temporary hit, according to Ulzheimer.
“You’ll also have a new account hit all three of your credit reports, which will lower the average age of your accounts and can lead to a lower score,” he said. “But at the same time you may have also caused your revolving utilization to go down and perhaps go down a lot.”
We don’t recommend opening too many accounts in a short amount of time. Besides dinging your credit history with a bunch of new accounts, this could signal to lenders that you’re in financial distress and may not be able to pay back your debts in the near future.
5. Add your bills to your credit report
Typically, on-time payments for bills like your utility or rent don’t appear on your credit report because they’re technically not lines of credit. However, if your credit history needs a boost and a line of credit isn’t an option, you can request that these bills be added to your credit report to improve your on-time payment history.
Two of the major credit reporting bureaus, Experian and TransUnion, offer bill reporting services. Experian offers free bill reporting through a service called Experian Boost, and TransUnion offers a paid service with eCredable Lift. The drawback is that Boost only affects your Experian data, while Lift is only based on TransUnion data.
“The effectiveness is going to vary by consumer and by what you’ve added to your credit reports,” Ulzheimer said.
Bills such as rent and utilities can also be added to your credit report through third parties for a monthly fee. There are a few companies out there that do this, such as LevelCredit, Rental Kharma, RentTrack and PayYourRent. Each company charges a different amount and offers a slightly different service, so do a little research before you decide which one you want. And be sure your payments are on time, otherwise you could end up worsening your credit.
Ways to build your credit score if you don’t have one
If you don’t have a credit score and are just starting out, Ulzheimer shared the following tips for building your credit score:
- Apply for a secured credit card. A secured credit card is generally easier for those with no credit to get approved for because you provide cash upfront to secure the card. Most secured cards use this security deposit as your credit limit.
- Apply for a store credit card. Store cards tend to be easier to get approved for and can help you begin building credit. However, store credit cards tend to have low credit limits and a higher APR than general credit cards. Make sure you always pay your balance in full to avoid interest charges.
- Become an authorized user on someone else’s credit card. If a family member, spouse or friend has good credit, you might ask them to add you as an authorized user on their credit card. But this feature is becoming less helpful, according to Ulzheimer. “The authorized user strategy, which was at one point a fantastic option, has been neutered to some extent by FICO because that strategy has been abused by credit repair companies,” he said.
- Get a co-signer. A co-signer with a good credit score can help you qualify for financing. Just be sure to use your new credit responsibly -- any missed payments will impact your credit score, as well as your co-signer’s.
- Apply for a credit builder loan. Instead of receiving the money upfront as with a traditional loan, the money you request to borrow is held in a separate account. Each month you’ll make payments toward this loan and every month your lender reports your payment history to the credit bureaus. Once the loan is paid off, you’ll receive the funds. This option is more of a last choice because of its minimal impact, according to Ulzheimer. “Taking out a credit building loan isn’t really a score improvement move because installment loans are almost meaningless to your credit scores, as long as they’re being paid on time,” he said.
How long does it take to repair your credit score?
Raising your credit score isn’t something that can happen overnight -- and it could take months or years to see significant changes. Consistency is key, including paying your bills on time and keeping your credit utilization low.
It is possible to see incremental improvements of a few points from month to month, especially if you decrease your credit utilization ratio significantly.
What brings your credit score up the fastest?
Lowering your credit utilization by paying off debt is the best way to improve your credit score quickly. Additionally, you can request credit limit increases or apply for a credit card to increase your available credit and decrease your credit utilization ratio.
How your credit score is calculated
Your credit score is calculated based on the information in your credit report. The three major credit bureaus, Experian, Transunion and Equifax, each produce a credit report; you should request all three as your score might vary among them. FICO, short for the Fair Isaac Corporation and the most widely used credit scoring system, uses the same formula to determine a credit score regardless of which credit report it is using.
There are five categories that affect your credit score:
- Payment history (35%): This captures your history of making payments on time.
- Credit utilization (30%): How much debt you hold versus how much credit is available to you. A good credit utilization rate is 30% or below, but if you can aim for 10% or lower, it’s even better for your credit score.
- Length of credit history (15%): The longer you’ve had a line of credit, the better.
- Credit mix (10%): There are two types of credit -- revolving credit (credit cards) and installment credit (mortgages, auto loans, student loans, etc.). You want a healthy mix of both.
- New credit (10%): This refers to new credit cards, loans, mortgages or other lines of credit opened.
Why is a good credit score important?
A good credit score can make a big difference in your financial life. If you’re applying for a loan or credit card, the lender will, among other things, check your credit score. If your credit score is low, the lender may not approve you for the loan or may charge much higher interest on the loan than a borrower with a high credit score. Especially on big loans -- like for a mortgage or a car loan -- the difference of a few percentage points could end up costing you thousands in additional interest paid over the life of the loan.
The bottom line
When it comes to rebuilding credit fast, the key things to remember are to pay down your debt, make your payments on time and ask for a credit line increase. It takes time, but following these tips will get your credit score up in less time than you might expect.
First published on Aug. 25, 2021, at 6 a.m. PT.
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