Want to increase your credit score fast? Having a poor credit score is a major disadvantage financially. It is best to have a good credit rating whether you want a credit card, an auto or a home loan, or other life purchases. A bad score really takes a toll and can cost you many thousands of dollars. If your score is not favorable, you’ll want to increase your credit score and quickly. While it cannot happen overnight, stick to our action items and your score will improve. Our credit-boosting tips can help boost your financial health and increase your credit score fast!
Know your credit and fix any errors.
First and foremost, know what you are working with. It is the most important thing you can do is to find out what’s on your credit report which determines your score. This way you can fix any errors or fraudulent activity on your credit report. You can get a free report each year at annualcreditreport.com or by calling 1-877-322-8228. Review your report thoroughly and look for accounts you don’t recognize or any mention of late payments. You’ll want to call the companies with any questions and to make corrections. This action item alone will increase your score fast.
Understand what makes up your credit score.
There are many various credit scoring models, but the FICO credit score is used by most. According to FICO, there are many factors in calculating your credit score.
Payment history (35%) — Your account payment information which includes any late payments and items from public records.
Amounts owed (30%) — The amount you owe on your accounts and the amount of credit you’re using.
Length of credit history (15%) — How long ago you opened accounts.
Credit Mix/Types of Credit (10%) — The types of accounts you have, both revolving and installment.
New credit (10%) — The applications for new credit, including hard credit inquiries and recently opened accounts.
Set up automatic payment reminders to make on-time payments.
Because your credit score is calculated 35% based on timely payments, it is crucial to pay on time. Automatic payment reminders will help you to pay each month by the due date. Many lenders offer email or text reminders. Consider automatic payments from your checking account if you think that would work better for you. You can set this up to pay on a specific schedule. Taking action of either auto reminders or auto payments will put you on your way to establishing a great payment history and will improve your credit score. It will take several months of on-time payments, but you will see a difference in your score.
Pay down your debt.
While this may be difficult, paying down the amount you owe will help your credit score. Additionally, it is a wonderful feeling to not have as much debt. A great first action item is to refrain from using your credit cards. Next, determine who you owe, how much and at what rate. Last, determine your plan of attack. Try to pay more than the minimum required payment to work on reducing your overall debt. Usually it’s best to pay off credit cards first. Use most of your payment budget towards the high interest items first. The lower the debt you have, the better credit utilization ratio which can impact up to 30% of your credit score.
Avoid opening or applying for new accounts.
When you apply for more credit, lenders and creditors may view this as a risk you’ll take on more debt that you won’t be able to pay off. Your credit score will more likely go up if you refrain from applying for additional loans or credit for some time. When you do apply for something new, consider the credit type to make sure you have a good mix of both revolving debt (i.e. credit cards) and installment debt (i.e mortgages or car loans).
Remember that it is worth the time and effort to invest in making your credit score as strong as it can be. It is building your financial foundation so that you can get the things in life you want.