Content of the material
- Here are 10 ways to increase your credit score by 100 points – most often this can be done within 45 days
- 4. Dispute Errors on Your Credit Report
- 4. Raise Your Credit Limits
- 4. Limits Your Requests for New Credit—and the Hard Inquiries with Them
- Does removing hard inquiries improve your credit score?
- How Long Does Improving Your Credit Score Take?
- 7. Make On-Time Payments
- 6. Report Rent and Utility Payments
- How to Fix Your Credit Score Fast
- Review Your Credit Report
- Sign up for Experian Boost
- Game the FICO System
- Become an Authorized User
- Add utility and phone payments to your credit report
- How much will this action impact your credit score?
- How to check your credit report
- 3. Check your credit report for errors
- How long do derogatory marks stay on your credit report?
- How is Experian Boost different?
Here are 10 ways to increase your credit score by 100 points – most often this can be done within 45 days
- Check your credit report. Get a free credit report from each of the three credit reporting agencies (Equifax, Experian and TransUnion) once a year at annualcreditreport.com. Look for errors that lower your credit score and take action to correct them. Review the negative factors in the report and work on improving them, such as paying bills on time or reducing debt.
- Pay your bills on time. Set up automatic payments using your bank’s bill pay service or sign up for e-mail alerts from your credit card company if you sometimes have trouble paying bills before the due date.
- Pay off any collections. Paying off a collection will increase your score, but be aware that the record of a debt having gone into collection will stay on your credit report for seven years.
- Get caught up on past-due bills. If you missed a payment, get current as soon as you can. A missing payment can lower your score by as much as 100 points. It may take a some time for this black mark to fade from your credit report, but take heart: your credit score usually depends more on your most recent activity than on past credit problems.
- Keep balances low on your credit cards. A common rule of thumb is to keep the balance at or below 10 percent on each line of credit to improve your credit score. A balance close to or over the limit will significantly reduce your credit score.
- Pay off debt rather than continually transferring it. While a balance transfer to pay zero interest or a lower interest rate on your debt can be worthwhile, make sure you pay down the balance before increasing your debt load. FICO says paying down your overall debt is one of the most effective ways to boost your score.
- Don’t close paid-off accounts. Closing unused credit card accounts reduces your available credit and can lower your credit score. Keeping them open and unused shows you can manage credit wisely. And think twice before closing older credit card accounts, because a long credit history improves your score.
- Shop for new credit over a short time period. If you are shopping for a mortgage, a car loan or a credit card, lenders typically pull your credit report to see if you qualify and to determine the rate they will charge. Too many inquiries over time can negatively impact your score, but if you cluster these applications within a few days or a week, the FICO scoring system will recognize that you are comparing rates for a single new loan or credit card rather than attempting to open multiple new lines of credit.
- Have a mix of credit types. FICO prefers to see consumers with both installment loans and credit cards . If you are repaying student loans or have a car loan or a mortgage, then having one or two credit cards is also a good idea. While having too many credit cards can be a negative factor, you should have at least one to prove you can handle credit appropriately.
- Apply for new credit sparingly. Only apply for new credit when you actually need it and not simply to boost your available credit. Opening several new credit accounts in a short time frame can lower your score.
4. Dispute Errors on Your Credit Report
Credit bureaus and lenders both make mistakes when it comes to your accounts. Every month, lenders report your successful or unsuccessful payments to the three credit bureaus — Equifax, Experian, and TransUnion. Many lenders are processing and reporting information on thousands of accounts every month, so there’s bound to be an error once in a while.
The credit bureaus may also be reporting information that is incorrect or inaccurate.
Regardless of who is at fault, remedying errors on your credit report is a great way to quickly improve your score. Request an annual credit report from one of the three credit bureaus — you can get one free credit report from each credit bureau once a year. Scan through the various accounts in your credit report and note any errors and what lender they come from.
If you find a lender error, call your lender to remedy the situation. Show the error on your credit report and ask that your lender update the information they send to the credit bureau. If the error is coming from the credit bureau, call them to dispute the report and correct your account.
It can be time-consuming to dig through your credit reports, but it will pay off. Fixing errors is a quick way to help boost your score.
4. Raise Your Credit Limits
If you tend to have problems with overspending, don’t try this.
The goal is to raise your credit limit on one or more cards so that your utilization ratio goes down. But again, this works in your favor only if you don’t use the newly available credit.
I don’t recommend trying this if you have missed payments with the issuer or have a downward-trending score. The issuer could see your request for a credit limit increase as a sign that you’re about to have a financial crisis and need the extra credit. I’ve actually seen this result in a decrease in credit limits. So be sure your situation looks stable before you ask for an increase.
That said, as long as you’ve been a great customer and your score is reasonably healthy, this is a good strategy to try.
All you have to do is call your credit card company and ask for an increase to your credit limit. Have an amount in mind before you call. Make that amount a little higher than what you want in case they feel the need to negotiate.
Remember the example in #1? Card A has a $6,000 limit and you have a $2,500 balance on it. That’s a 42% utilization ratio (2,500/6,000 = .416, or 42%).
If your limit goes up to $8,500, then your new ratio is a more pleasing 29% (2,500/8,500 = .294, or 29%). The higher the limit, the lower your ratio will be and this helps your score.
4. Limits Your Requests for New Credit—and the Hard Inquiries with Them
There are two types of inquiries into your credit history, often referred to as hard and soft inquiries. A typical soft inquiry might include you checking your own credit, giving a potential employer permission to check your credit, checks performed by financial institutions with which you already do business, and credit card companies that check your file to determine if they want to send you pre-approved credit offers. Soft inquiries will not affect your credit score.
Hard inquiries, however, can affect your credit score—adversely—for anywhere from a few months to two years. Hard inquiries can include applications for a new credit card, a mortgage, an auto loan, or some other form of new credit. The occasional hard inquiry is unlikely to have much of an effect. But many of them in a short period of time can damage your credit score. Banks could take it to mean that you need money because you’re facing financial difficulties and are therefore a bigger risk. If you are trying to improve your credit score, avoid applying for new credit for a while.
Does removing hard inquiries improve your credit score?
Yes, having hard inquiries removed from your report will improve your credit score—but not drastically so. Recent hard inquiries only account for 10% of your overall score rating. If you have erroneous inquiries, you should try to have them removed, but this step won’t make a huge difference by itself.
How Long Does Improving Your Credit Score Take?
There is no set minimum, maximum, or average number of points by which your credit score improves every month, and there is no set number of points that each action will gain. How long it takes to improve your credit depends on the specifics for why your credit score is low. If the major negatives on your credit score are credit utilization, and then you pay off your balances, your score can improve drastically in a single month. If your credit is low because of multiple collections and poor payment history, then it will take several months of on-time payments to see any positive movement in your score.
7. Make On-Time Payments
If you miss your payment due dates, stop.
Your payment history is the most influential credit score factor with a 35% weighting. Even if you can only make the minimum payment, your account remains in good standing—and you avoid late fees.
6. Report Rent and Utility Payments
Did you know that lenders aren’t required to report your payments to credit bureaus? Like lenders, landlords and utility companies are also not required to report your successful payments. While lenders almost always report your payments, landlords and utility companies don’t. Paying utilities and paying rent can build your credit score.
Simply call your utility company and landlord and ask kindly that they begin reporting your payments. If they agree, keep making payments and over time your score will go up. While this won’t boost your credit score overnight, it will allow you to build your credit history without taking on more debt. Keep in mind that just as a successful rent or utility payment can help you, so too can a late payment hurt you.
How to Fix Your Credit Score Fast
Review Your Credit Report
Begin by investigating your credit report for negative information and have it removed. Yes, such things are entirely possible.
- Request your full, free credit report. You are owed one per year from each of the big three credit-reporting agencies: Experian, TransUnion, Equifax. One in five credit reports contain errors and/or omissions that can significantly drop your score. Vigorously dispute every discrepancy; provide copies of documents that support your claims.
- For accounts in collections, explore “pay to delete,” a method of removing negative information by negotiating a settlement with the agency holding your bad debt. Get the agreement in writing before you send money.
- Send “goodwill” letters to creditors with whom you’re having difficulties. Typically, goodwill letters are short, simple, pleasant, and direct requests to lenders asking them to remove negative entries. Creditors are not obligated to oblige, but you may strike pay dirt, especially if you’ve had only a few blemishes with the company in an otherwise punctual history.
Sign up for Experian Boost
If your low score is primarily the result of being new to the credit-seeking game and you are timely with your payments for utilities and your cell phone, ask the lender to pull a report from Experian, using its “Experian Boost” plan. This hybrid model draws on what the industry calls “alternative credit data” — non-traditional payments that provide lenders useful insight into an applicant’s creditworthiness.
The way forward gets a little steeper from here, so it’s a good idea to know what you’re up against.
Game the FICO System
Of the five categories influencing your credit score, there’s really only one you can influence significantly short-term: your credit utilization ratio.
Pro tip: Make sure payments arrive before the statement closing date. That way, lower balances get reported to the FICO and the big three.
Most other factors being equal, consumers with scores in the upper 600s — the bottom of the “good” range — have credit utilization ratios between 40-50%. To get into the 700s, your utilization must sink below 30%. If you’re in a hurry to help your score, use under 15%. The less you use, the better.
Fixing this is a cinch … if you have a fat savings account or maybe a wealthy (and generous) uncle. Otherwise, you need to find extra money in your budget (or extra income in your month), combined with spending discipline, to whittle down those balances.
Another way to attack high balances is with a debt-consolidation loan — if you can swing it. Present your plan to a bank or credit union, or go online to any of the assorted peer-to-peer lenders and you may be able to zero out your credit-card balances at the same time you secure a lower interest rate than you were paying Visa.
We’ve read here and there another way to lower your credit utilization ratio is to seek a boost in your balance limits from your current lenders. The mathematics of this gambit are undeniable, but the idea of seeking higher balances when we’re having trouble managing the balances we have makes our stomaches ache.
Become an Authorized User
If you have a mystifyingly benevolent parent with impeccable credit, ask to be added to his/her account as an authorized user. This will not only help your credit utilization (ideally the added account doesn’t have a high balance) but it should also lengthen your credit history. Remember, this card is strictly for a credit boost, so do not under any circumstances, use the card when it arrives in the mail.
Add utility and phone payments to your credit report
Typically, payments such as utility and cellphone bills won’t be reported to the credit bureaus, unless you default on them. However, Experian offers a free online tool called Experian Boost, aimed at helping those with low credit scores or thin credit files build credit history. With it, you may be able to get credit for paying your utilities and phone bill — even your Netflix subscription — on time.
Note that using Experian Boost will improve your credit score generated from Experian data. However, if a lender is looking at your score generated from Equifax or TransUnion data, the additional sources of payment history won’t be taken into account.
There are also services that allow rent payments to be reported to one or more of the credit bureaus, but they may charge a fee. For example, RentReporters feeds your rental history to TransUnion and Equifax; however, there’s a $94.95 setup fee and a $9.95 monthly fee.
How much will this action impact your credit score?
The average consumer saw their FICO Score 8 increase by 12 points using Experian Boost, according to Experian.
When it comes to getting your rent reported, some RentReporters customers have seen their credit scores improve by 35 to 50 points in as few as 10 days, according to the company.
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.
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 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.
How is Experian Boost different?
Unlike credit repair companies, Experian Boost is completely free and can increase your credit scores fast. Credit repair may cost you thousands of dollars and only help fix inaccuracies, which you can do yourself for free. Piggybacking services that add you to a stranger’s account are risky and considered deceptive by lenders. Raise your credit scores securely with Experian Boost.