11 Ways to Build and Improve Your Credit Score Fast – Establishing a good credit score isn’t a complex process, but it’s a vital piece of your financial picture. Having a high score gives you access to the best credit cards, a lower interest rate on personal loans and can even come into play when you apply for a new job or rent an apartment.
How to Improve Credit Score Fast:
- It takes less than a couple of days to pull all your credit reports from the three major credit bureaus, and assessing your credit score is the first step to raising it.
- In just a few hours, you can set due-date alerts for bills, so you know when a bill is coming up. Paying your bills on time Is one of the most important steps in improving your credit score.
- Pay down your credit card balances to keep your overall credit use low. You can also phone your credit card company and ask for a credit increase, and this shouldn’t take more than an hour.
- Don’t close old credit card accounts or apply for too many new ones.
- You can sign up for credit monitoring services quickly, and they will help you keep on top of your credit score.
The quickest ways to improve your credit score:
Improving your credit quickly is even more important if you have a subprime credit score, which is often defined as a FICO credit score below 669 or a VantageScore below 600. People with low credit scores may have a harder time accessing credit and are often charged higher interest rates on credit cards, loans and mortgages.
1. Pay All Your Bills On Time:
On-time payment history is the most important factor when building credit. Your payment history, which is one factor that makes up your FICO score, accounts for 35% of your FICO credit score. This means you should always aim to pay your bills on or before the due date.
Setting up automatic payments is the easiest way to pay bills on time. You’ll connect your bank account to the provider, who will automatically charge your account on or before the due date. Creating automatic payments means you won’t have to worry about missing a payment, as long as you have enough money in your bank account to cover the bill.
If you choose to not use autopay and realize you’ve missed a payment, contact the lender or bill provider and rectify it as soon as possible. Only late payments over 30 days are reported to the credit bureaus. The later the payment, the more it will impact your score.
2. Pay Off Any Existing Debt:
To reduce your credit utilization ratio quickly and improve your score, use the debt avalanche or debt snowball method to pay down existing debt:
With the debt avalanche method, you focus on paying off your highest-interest debt first, followed by the debt with the next highest interest rate, and so on. However, be sure to make the minimum payments on any other cards in the process to avoid any penalties.
The debt snowball method, on the other hand, focuses on paying off your smallest balances first while still meeting the minimum payment requirements for your other cards. This method is meant to help build momentum as you get a sense of achievement from paying off one card after another.
3. Set Up Automatic Bill Payments:
The best way to avoid missing a monthly loan or credit card payment is to put your bills on autopay. Make sure you have enough money in your checking account to cover each bill to avoid an overdraft. When you know you won’t have to deal with a sudden score dip after a forgotten bill, you can focus on other ways to improve credit.
4. Don’t open too many accounts at once:
FICO and VantageScore look at the number of credit inquiries, such as applications for new financial products or requests for credit limit increases, as well as the number of new account openings. Making these kinds of inquiries frequently dings your credit, so only apply for what you really need in order to avoid damaging your score. Plus, even if you have a good credit score, some issuers will automatically deny you if you’ve recently opened too many accounts. For example, you can’t be approved for most Chase cards if you’ve opened five or more personal credit cards (from any card issuer) within the past 24 months.
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If you want a new card, but you’re not sure you’ll qualify, you can submit a pre-qualification form online. You can submit as many pre-qualification forms as you want, as they won’t impact your credit score.
5. Negotiate a lower interest rate:
A lower rate can help you pay off your balance faster, because more of your payment can be applied to your principal balance than interest. Lower balances can mean a lower credit utilization ratio (and a lift in your scores). Learn more about how to lower your credit card interest rate.
6. Lower your credit utilization rate:
The fastest way to get a credit score boost is to lower the amount of revolving debt (which is generally credit cards) you’re carrying.
The typical guidance from personal finance experts is to use no more than 30% of your credit limit, which applies both to individual cards and across all cards. For example:
On a card with a $500 credit limit, spend no more than $150.
On a card with a $700 credit limit, spend no more than $210.
On both cards (a $1,200 combined limit), spend no more than $360.
7. Ask for a credit limit increase:
A higher credit limit is another way to help reduce your credit utilization ratio, which can help raise your credit scores. Keep in mind though that some credit issuers do a hard credit check when you request a credit limit increase, and that can cause your credit to dip. Read up on how to ask for a credit limit increase.
8. Get a secured credit card:
Secured credit cards are great tools for building credit. They generally have less-stringent requirements for applicants — but the main downside? You’ll have to pay a security deposit upfront that’s typically equal to the credit line you’ll have with the card. You may be able to choose how much you put down, but a lower security deposit could mean your credit utilization ratio is higher when you use the card.
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Consider looking for a secured credit card that allows you to “graduate” to an unsecured card after you’ve had it for a period of time. If you get a secured card with the aim of building credit, focus on paying your bills in full and on time each month to build a positive payment history and avoid racking up interest.
9. Join an Account as an Authorized User:
You can also improve credit by joining a trusted family member’s or friend’s credit card account as an authorized user. You’ll be able to use the card to make purchases, and the card’s payment history will show up on your credit report. That makes it crucial to pick someone whose credit you will benefit from. Work with the primary cardholder to pay them for your purchases, as they’ll be ultimately responsible for any balance on the card.
10. Dispute Credit Report Inaccuracies:
You can get a free credit report from each of the three main credit bureaus at AnnualCreditReport.com. Check them each carefully. You have a right to file a dispute if you find something on your report you believe shouldn’t be there, such as an incorrectly reported late payment. You can also report the problem to the appropriate loan or credit card issuer, which may then update the information with the bureaus. Fixing any issues could give your credit scores a lift.
11. Use Your Tax Refund to Help Your Score:
Tax season is just around the corner, so this is a New Year’s resolution you can set now and put into action once you get your refund. Consider earmarking your tax refund to help you pay off debt and improve your score.
For example, you could put your full refund toward a high-interest balance you’re carrying. Or, you could put that money toward the deposit on a secured credit to help you get started establishing a credit history.
5 factors that affect 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.
