Life is busy and complicated, so it’s easy to ignore — or forget about — your credit score. But whether you are aware or not, your credit score is out there, directly tied to your name and financial health and impacting your ability to secure lines of credit or loans in the future.
Let’s back up for a moment. A credit score is the method that banks and other lenders use to establish whether or not you’re likely to pay back your loan. It’s usually a three-digit number between 300 and 850, and it’s calculated using information from your credit reports, including your current debt and your rate of timely payments. Any number above 700 is considered good, and a high credit score can be a key factor in securing a loan for a house, car or other large purchase.
Fortunately, if you have a lower credit score, the good news is some people might be able to raise their credit score by up to 100 points in just 30 days — and that’s just to start. Here’s some things to consider.
Check your credit report.
Unfortunately, more than 25 percent of US residents have reported errors on their credit report. Whether it’s on-time payments that have been marked late, fraudulent or duplicate accounts or incorrect information, small errors can have a big impact on your credit score.
The process is simple: request your credit report, look it over carefully and if you spot any errors, gather any proof (statements, certificates and other relevant documents) and dispute the errors with your credit bureau and reporting party. These bureaus have 30 days to respond, and can usually get your credit score back on track if there’s been a mistake.
Pay down your balance.
If you have a little extra money stashed away somewhere, now might be the time to use it. Paying down a chunk of your balance and keeping it low is often the quickest way to improve your credit score. That’s because this strategy improves your credit utilization rate, which is the sum of your card balances divided by your available credit — a lower number is better — and the total is factored in to your credit score, as it signals that you’re managing your debt. Alternatively, a higher utilization rate shows that you are carrying a higher amount of debt relative to your available credit.
Once you pay down or pay off your balance, your payment is almost instantly used to calculate a new utilization rate, sometimes giving your score a quick boost.
Increase your credit limit.
It may seem like you’re going the wrong direction by potentially giving yourself more money to spend. But when you increase your limit on a card, or open up an additional card, it often improves your credit utilization rate if you don’t spend that extra amount.
It works fast as you could see an improved score once the new limit reaches credit bureaus. But it’s important to keep two things in mind: This method does take some serious self-discipline, as having the available credit doesn’t mean you could or should use it. Also, don’t lean into this plan too often; your credit score can be negatively impacted by opening new cards and accounts.
Become an authorized user.
Have a friend or relative who has good credit? Consider asking them to add you to their account as an authorized user. As long as the primary cardholder continues their responsible credit habits, you might build up your credit score simply by being on the account.
Call the collection agency.
Yes, this can be tedious — and potentially nerve-wracking. But having an account in collections can take a serious toll on your credit score. If you can figure out how to pay your collection account in full, work out a payment plan with a collection agency, or get some kind of goodwill forgiveness, you can quickly see your score rise in some context — and likely alleviate a lot of budget-related stress.
Pay your bills on time.
Paying bills on time is the number one factor used to evaluate your credit score. It can not only help give the number a boost, but you can ensure long-term credit health simply by paying your bills by the day they’re due. Remember that late payments can stay on your credit reports for more than 7 years, so staying on top of your bill schedule in whatever way works for you is one way to ensure you keep your score high.
Apply for credit sparingly (though remember that a diverse credit mix is helpful).
A diverse mix of different types of credit accounts — think credit cards, installment loans, mortgages and other debt — can positively impact your credit score. Just remember that every time you apply for a new line of credit, it usually triggers an inquiry on your account, which can temporarily lower your score. Be selective about applying for new credit, and do so only when necessary — and manageable — and remember that a variety of credit types may look better on your score than a bunch of credit cards.
Get credit for rent and other payments.
Rent, utility bills and other monthly payments such as streaming services aren’t factored into every credit score model. But services like Experian Boost or a rent reporting service can help you apply your on-time bill payments to your credit report. Link your bank account up to one of these programs and they’ll scan for monthly utility or tech payments. Likewise, a rent reporting service will add that to your credit report, allowing creditors to look at your file and see a long history of punctual payments.
Be patient and persistent.
Building up your credit score takes time, so be patient and consistent with your efforts. Follow the right steps and you’ll not only improve your score, but likely develop better habits moving forward.
With a few different strategies, some people can up their credit score in as little as 30 days. But even more importantly, you can keep it high, helping to ensure solid financial health moving forward.
DISCLAIMER – This content is for informational purposes only. Pangea and its affiliates do not provide financial, investing, or legal advice. This information should not be relied on as a substitute for professional opinions and independent research.
