Content of the material
- How To Raise Your Credit Score Fast
- How Is Your Credit Score Calculated?
- How long do derogatory marks stay on your credit report?
- 3. Check your credit report for errors
- How Long Does It Take to Rebuild a Credit Score?
- 3. Pay Twice a Month
- 6. Do not pay your accounts in collections
- How to check your credit report
- 2. Identify the negative accounts
- 5. Set up a Credit Monitoring Account
- The truth about raising your credit scores fast
- 5 factors that affect your credit scores
- What determines your credit score?
- Ask for late payment forgiveness
- How much will this action impact your credit score?
- 2. Work on paying down high credit card balances
- The bottom line about building credit fast
- So, Can Experian Boost Improve Your Credit Score?
- How quickly can you improve your FICO score?
- About the Author
How To Raise Your Credit Score Fast
- Find Out When Your Issuer Reports Payment History
- Pay Down Debt Strategically
- Pay Twice a Month
- Raise Your Credit Limits
- Mix It Up
How long will it take to increase your credit score? It won’t happen instantly, but if you follow the steps in this article, your credit score will begin to go up within a couple of months. Let’s get started.
How Is Your Credit Score Calculated?
It’s important to know what exactly makes up your credit score and how credit works. This knowledge will help you make good credit decisions and maintain good standing down the road. Let’s get to it.
- Payment History (35%): Your monthly payment history has the biggest weight on your credit score. Your payment history is simply the record of your past payments from any loan account or line of credit from the past 7 to 10 years.
- Credit Utilization (30%): Credit utilization is how much of your credit limit you use every month. Lenders and credit bureaus want to see your credit utilization ratio at 30% or less of your available credit per month.
- Length of Credit History (15%): The longer you’ve had your credit account, the better. If you’ve successfully made payments for 10 years, your credit history looks much better than someone who only has one year of credit history. Any credit history seven years or older is good for your score.
- Credit Mix (10%): Your credit mix is made up of your different types of debt. Lenders want to see a diverse mix in your credit report. For example, an auto loan lender might see that you’ve never had a loan, only credit cards. This inexperience can be a red flag.
- New Credit (10%): It’s better for your credit score if you don’t have many recent accounts opened. Remember that every time you seek new credit you get an inquiry on your credit report. A hard inquiry is common when seeking new loans or lines of your credit. These can lower your score anywhere from 5-10 points, so make sure you have fewer than five inquiries in any six-month span.
How long do derogatory marks stay on your credit report?
Your score is determined by the three credit bureaus (Equifax, Experian and TransUnion), but it’s up to your lenders to contact them to report information about you. It can be as simple as your credit card company reporting that you made a monthly payment on time, increased your debt or decreased your balances. These are all positive influences on your score, but there may be a slight lag in timing due to the reporting process.
In addition to a potential delay in the telephone game between your credit issuer and the credit bureaus, certain financial events can linger on your credit history for years. Unfortunately, the more harmful events are often the ones that stick around the longest, so it’s best to know what actions will be the biggest burdens:
|Event||Average time on credit report|
|Late payments||7 years|
|Debt collections||Up to 7 years|
|Chapter 13 bankruptcy||7 years|
|Chapter 7 bankruptcy||10 years|
This may seem ominous, but here’s the good news: recency bias is alive and well in the credit scoring world. Even if they’re still present, the old items that appear on your report have less weight than your newer ones.
3. Check your credit report for errors
One way to quickly increase your credit score is to review your credit report for any errors that could be negatively impacting you. Your score may increase if you are able to dispute them and have them removed.
About 25% of Americans have an error on their credit reports, so it's important to take the time to review. Some common errors to look out for include fraudulent or duplicated accounts, as well as misreported payments.
"Most of the clients we meet with have not reviewed their report within the past year, and are often surprised by what we find to discuss with them," says Thomas Nitzsche, a financial educator at MMI.
How Long Does It Take to Rebuild a Credit Score?
There’s no set timeline for rebuilding your credit. How long it takes to increase your credit scores depends on what’s hurting your credit and the steps you’re taking to rebuild it.
For instance, if your score takes a hit after a single missed payment, it might not take too long to rebuild it by bringing your account current and continuing to make on-time payments. However, if you miss payments on multiple accounts and you fall over 90 days behind before catching up, it will likely take longer to recover. This effect can be even more exaggerated if your late payments result in repossession or foreclosure.
In either case, the impact of negative marks will diminish over time. Most negative marks will also fall off your credit reports after seven years and stop impacting your scores at that point if not sooner. Chapter 7 bankruptcies can stay for up to 10 years, however.
In addition to letting time help you rebuild your scores, you can follow the steps above to proactively add positive information to your credit reports.
You may also hear about credit repair companies that offer to repair or “fix” your credit—for a price. It might seem tempting, but credit repair companies can’t do anything that you can’t do on your own for free. Similarly, you should be wary of so-called debt settlement companies that may encourage you to stop making payments in an attempt to try to “settle” the debt for less than you owe. Their plan can result in major credit score harm and may not even ultimately work to reduce your debt obligation.
3. Pay Twice a Month
Let’s say you’ve had a rough couple of months financially. Maybe you needed to rebuild your deck (raising my hand) or had to get a new fridge. If you put big items on a credit card to get the rewards, it can temporarily throw your utilization ratio (and your credit score) out of whack.
You know that call you made to find out the closing date? Make a payment two weeks before the closing date and then make another payment just before the closing date. This, of course, assumes you have the money to pay off your big expense by the end of the month.
Take care not to use a credit card for a big bill if you plan to carry a balance. The compound interest will create an ugly pile of debt pretty quickly. Credit cards should never be used for long-term loans unless you have a card with a zero percent introductory APR on purchases. Even then, you have to be mindful of the balance on the card and make sure you can pay the bill off before the intro period ends.
6. Do not pay your accounts in collections
If a collection agency will not remove the account from your credit report, don’t pay it! Dispute it! A collection is a collection. It doesn’t help your score AT ALL to have a bunch of collections on your report with a zero balance. The only way your credit score will improve is by getting the collection accounts removed from your report entirely.
Don’t pay collection accounts without a pay-for-delete letter. A “pay for delete” is an agreement that you will pay the outstanding debt if the collection company deletes the account from your report. You may be able to settle the balance for less than you owe, but many will want you to pay in full if they are deleting it from your report.
How to check your credit report
You can get a free copy of your report at annualcreditreport.com.
Under normal circumstances, you would be able to get one free report from each of the three major credit reporting bureaus (Experian, TransUnion, and Equifax) per year. However, in response to COVID-19 you can access a free weekly report from any of the bureaus through December 31, 2022.
Check your credit report for errors, which could be dragging your score down. If you find mistakes, you can get items removed from your credit report by disputing the information directly with the credit bureau. They are obligated to investigate any dispute and resolve it within a reasonable amount of time. Keep in mind, however, that only incorrect information can be removed from your report.
According to Richardson, each credit report will have the information you need to improve your score. “There are four or five bulleted statements about your credit profile that can help you make a road map of what to do if you’re really in a position where you need to improve your score,” he says.
You may also find a numerical or text code in your report, but no additional information as to what it represents. These are factor codes and represent items that may be dragging your score down. VantageScore has a free website, where you can enter the code from any credit report and get an explanation of what it stands for and advice on how to resolve the issue.
If you’re unsure if there are mistakes on your report or have trouble getting issues resolved on your own, you can look for expert help. Credit repair companies not only know how to identify and correct erroneous information but can also help mitigate the impact of legitimate negative items on your report.
2. Identify the negative accounts
Now that you have your credit report go through it and highlight accounts with a negative status. Highlight any late payments, collection accounts, or any other negative information. Make sure your personal information is correct, including your address, employer, and phone number.
Items to focus on
- Collection accounts
- Late payments
- Credit inquiries
5. Set up a Credit Monitoring Account
One of the best ways to stay on top of your credit score is to work with a paid or free credit monitoring system. Many financial organizations will offer complimentary credit monitoring services.
Use services that provide you with real-time alerts and free credit score tracking. If you see inaccuracies on your credit report, these monitoring accounts will allow you to open online disputes immediately. Monitoring your financial accounts will also help you detect possible fraud quickly to minimize risk. Ideally, every time your account balances change you should be notified and your monitoring system should keep track of your credit utilization ratio.
The truth about raising your credit scores fast
While a lucky few may be in a situation where they can raise their credit scores quickly, the bottom line for most of us is that building credit takes time and discipline, especially if you’re trying to rebuild bad credit. That’s because your credit scores are complex and made up of several interconnected factors (more on that below).
So trust us: While some credit repair agencies may promise to raise your credit scores fast, there’s no secret that will help boost your credit scores quickly.
But if you start developing healthy habits now, you can build credit over time all by yourself.
5 factors that affect your credit scores
As we mentioned above, there are several factors that go into determining your credit scores.
- Payment history makes up the biggest chunk of your credit scores. That’s why it’s so important to make on-time payments each month if at all possible. Late payments can haunt your credit history for up to seven years.
- Credit usage, or credit utilization, is another important factor. This measures how much of your available credit you tap into at any given time. Experts recommend you keep this to less than 30%.
- The length of your credit history has some impact on your credit, though not much. This factors in the ages of your oldest and newest credit card accounts, as well as the average age of all your accounts. The older your credit, the better, because it shows lenders you have more experience managing credit.
- Your credit mix has a small impact on your credit. This looks at the types of credit you borrow. Lenders want to see that you can balance revolving accounts like credit cards with installment accounts like mortgages, student loans, auto loans and personal loans.
- Your recent credit also has a small impact on your credit. This tracks the applications you file for things like new credit cards and personal loans with hard inquiries. The fewer, the better.
What determines your credit score?
Five factors make up your FICO score calculation:
- Payment history: 35% of your score
- Credit utilization ratio: 30% of your score
- Average age of credit: 15% (a longer credit history will raise your score)
- Credit mix: 10% (a mix of installment accounts like car loans are better than revolving credit accounts like credit cards)
- New credit: 10% (opening too many new accounts and having too many credit inquiries over a short period can lower your score)
An improvement in any of these categories can help boost your credit score. But to see the biggest impact, make sure you pay all your credit accounts on time and keep your credit balances below 30% of their total limit.
Ask for late payment forgiveness
Paying on time constitutes 35% of your FICO Score, making it the most important action you can take to maintain a good credit score. But if you’ve been a good and steady customer who accidentally missed a payment one month, then pick up the phone and call your issuer immediately.
Be ready to pay up when you ask the customer rep to please forgive this mistake and not to report the late payment to the credit bureaus. Note that you won’t be able to do this repeatedly — requesting late payment forgiveness is likely to work just once or twice.
You have 30 days before you’re reported late to the credit bureaus, and some lenders even allow as long as 60 days. Once you have a late payment on your credit reports, it will stay there for seven years, so if this is a one-time thing, many issuers will give you a pass the first time you’re late.
How much will this action impact your credit score?
If you’re a day or two late on a credit card payment, you might get hit with a late fee and a penalty APR, but it shouldn’t affect your credit score yet. However, if you miss a payment by a whole billing cycle, it could drop your credit score by as many as 90 to 110 points.
If you fall 30 days or more behind, you can try sending a “letter of goodwill” or “goodwill adjustment” to the credit card issuer. In this letter, you’ll take responsibility for the late payment and request the issuer remove it from your credit reports. The issuer isn’t required to comply, but for a loyal customer with a good record, it doesn’t hurt to ask.
2. Work on paying down high credit card balances
Your credit card balances play a huge role in your credit score. In particular, it’s important to have a low credit utilization ratio. That ratio is your current card balances compared to your credit limits.
The ideal credit utilization ratio is 20% or less. If you have $5,000 in total credit limits, you should aim for a total balance of $1,000 at most.
For an example of how much credit utilization matters, one personal finance writer’s credit score fell by 32 points when she went over 50% credit utilization.
If your credit utilization is higher than 20%, put as much of your extra cash as possible toward your credit card debt. Once you pay down those balances, you should see your credit score go up in one or two months.
The bottom line about building credit fast
When you’re working to fix your credit, it takes good behavior over time. However, lowering your utilization rate by paying down existing debt, getting a new credit card or requesting a credit line increase on an existing card can provide the quickest credit score boost.
Any late payments and debts sent to collection should be handled promptly — otherwise, they’ll just cause more pain once they hit your credit reports. It’s also wise to review your credit reports on a regular basis. in order to spot errors that might be dragging down your credit score.
Knowing what actions to take that can help improve your credit score and being a responsible borrower can boost your chances of increasing your credit score by 100 points or even more.
So, Can Experian Boost Improve Your Credit Score?
Two thirds of people who sign up for Experian Boost see an increase in their score, and the average jump is 13 points, according to Griffin.
If your credit score is already at the higher end of the spectrum (mid-700s and above), any boost you see may be minimal. But for people with credit scores of 680 or lower, the average increase is 19 points.
“The people who see the most impact are people who have a short credit history, a thin credit profile made up of fewer than five accounts, or scores below about 680,” Griffin says. “So if you’re just starting out or you’ve had some credit issues in the past but you’re moving in the right direction, that’s who is benefiting the most.”
If you don’t see any benefits to your score initially, it is possible that Boost will help over time through a sustained positive payment history. Still, you can choose to remove Experian Boost from your credit report at any time with no negative repercussions; your Experian credit score will simply revert to what it was before.
How quickly can you improve your FICO score?
If all you need is error correction, you may see your FICO increase in a matter of days. However, there is no guarantee that correcting errors will make your score go up.
Paying down significant amounts of debt — say, dropping your credit utilization rate from 80% to 20% — can also bump your score up rapidly.
But if your credit report is littered with late payments collections or other serious problems, Gardner says it can take “up to 12 months to raise your score.” You must first demonstrate a consistent payment history.
About the Author
Lyle Daly Lyle is a writer specializing in credit cards, travel rewards programs, and banking. His work has also appeared on MSN Money, USA Today, and Yahoo! Finance.