How to Raise Your Credit Score Fast: 10 Strategies to Boost Your Number
So, what is your number? No, not that number, your financial number. Your credit score!
There are few numbers more significant to your financial life than your credit score and finding ways to raise it can have a lot of benefits.
Your credit score is like your financial fingerprint. It is part of your money identity and it has a powerful affect on your financial health.
Think of it as a numeric expression that lenders use to evaluate your creditworthiness. It tells them at a glance how responsible you've been with your finances.
A higher score means better interest rates and more credit opportunities, so it's in your best interest (pun intended) to aim for a good number.
Improving your credit score might seem too challenging but there are actually some simple strategies that will help.
Check out these 10 tips to raise your credit score fast!
Understanding Credit Scores
In the world of lending and credit, knowing your credit score and how it's determined is like having the key to your financial identity.
Your credit score is a three-digit number that reflects your creditworthiness. Scores range from 300 to 850, indicating to lenders how likely you are to repay borrowed money.
A higher score can make it easier for you to get loans, credit cards, and lower interest rates so you can save money.
The two main credit scoring models are FICO and VantageScore. Here is the general range of good and bad credit scores:
These scores are calculated based on your credit report from three major credit bureaus: Experian, Equifax, and TransUnion. You can actually request free credit reports from them.
10 Quick Ways to Boost Your Credit Score
Use these tips and tricks for building credit.
1. Download a Credit Building App
One fast way to start building credit is with credit builder apps like Kikoff and Ava. You can download these apps and significantly boost your credit score fast.
With one of the apps, 74% of users see a boost in just 7 days! If you want to know how to increase a credit score quickly, just try one of these.
An excellent app to build your credit with is Kikoff. They give you a $500 line of credit to use and do not require a credit check.
Your on time payments on the credit are reported to the credit bureaus. They do require you to pay a monthly fee but it can be as low as $5 a month!
Apps like Kikoff and Ava improve your credit through key factors like payment history, credit utilization ratio, and credit mix.
If you want to know how to raise your credit score 100 points overnight it may not be possible, but you can at least tactics like these apps, credit repair or purchasing a tradeline.
2. Use Credit Repair Services
Credit repair companies like Credit Saint or Sky Blue can significantly improve your credit report for a fee.
Credit repair companies clean up your credit report and get any inaccurate, damaging or negative items removed to help increase your score.
79% of credit reports actually contain some type of mistake or error. You may have errors you aren't even aware of.
A Federal Trade Commission study showed that one in five people have an error on at least one of their credit reports.
Credit repair companies can help fix these types of issues and correct any fraudulent activities you may have on your report. I once had my credit nearly ruined by fraudulent accounts that had been opened and I had no idea!
Items that a credit repair company can fix:
One negative item on your credit report can lower your credit score by as much as 100-200 points. So getting these negative items removed will raise your credit score.
The two best credit repair companies to hire are Credit Saint or Sky Blue. You can check out this list of the 7 best credit repair companies.
3. Purchase an Authorized User Tradeline
A tradeline is just a fancy word for an account on your credit report. It includes the payment history, balance and standing.
A positive tradeline improves your credit score and a negative tradeline will harm it. One way to quickly improve your credit is to get an authorized user tradeline with positive credit history added to your report.
There are two ways to do this:
Have a friend or family member add you to one of their accounts
Purchase one from a a company like Tradeline Supply Company.
Tradeline credit repair is a really great tool at your disposal to help your credit and help it more quickly if you have the money to spend on it. Check out the 5 Best Tradeline Companies.
4. Open a Secured Credit Card Account
Secured credit card accounts come in handy when you're starting out or rebuilding credit. Think of it like training wheels for your credit score.
You put down a cash deposit, which typically becomes your credit limit. The apps we mentioned like Kikoff and Ava often provide this type of credit builder loan or account.
Another example is the Self Visa® Credit Card, which is tied to a Credit Builder Account—you save money over time and then use that as your deposit for the card.
5. Take Out Credit-Builder Loans
Unlike traditional loans, credit-builder loans exist to help you improve your credit and raise your fico score. Here's the lowdown:
To make the most of a credit-builder loan, ensure it's from a lender that reports to the 3 credit bureaus like Experian.
6. Make On Time Payments
Nothing can sink a credit score faster than late payments. If you have a history of that, start making all your payments on-time to give your credit score a raise.
Set up automatic payments so you don't have to worry about forgetting to pay. Your score hinges heavily on your payment history—it’s huge.
This part of your score reflects whether you’ve paid past credit accounts on time. It is 35% of your score calculation.
Got late payments? Chill, they won't haunt you forever. Prioritize paying them ASAP, and keep future payments on point.
Late payments fade in impact over time, but the goal is no more blips on your payment radar.
7. Lower Your Credit Utilization
Getting your credit score up can hinge significantly on how you handle your credit utilization. This is the percentage of your credit card limits that you're actively using, and it's a big deal in the credit score calculation, accounting for 30% of it.
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Your credit limit is the maximum amount you can charge on your credit card. It’s important to know that each card you have comes with its own limit and together, they add up to your total credit limit.
The amount of credit you use versus your total limit is your credit utilization ratio. To improve your credit, aim to use less than 30% of your total available credit across all cards.
Even better, striving to maintain utilization around 7% can be particularly beneficial. If you want to quickly improve your credit score, take at look at these numbers and pay down high credit card balances.
Lowering your balances relative to your limits will help you raise a bad credit score.
Here are a few hands-on tactics to manage your credit utilization:
8. Build a Strong Credit History
When it comes to building a strong credit history, two crucial factors to consider are how long you've been managing credit and the types of credit you handle.
Your credit history's length matters because it shows how reliably you've managed credit over time. Opening a new credit card can be useful, but it's the accounts you've maintained for years that contribute more significantly.
A longer credit history can signal to lenders that you have experience handling debt responsibly. It's worth keeping older accounts open, even if you're no longer using them, as they help to increase the average age of your accounts.
Tip: Keep your oldest credit card open and use it occasionally to avoid it being closed by the issuer for inactivity.
9. Use a Credit Mix
Having a variety of credit types—such as credit cards, auto loans, student loans, and mortgages—can show that you're capable of managing different kinds of debt.
Lenders like to see a mix of revolving credit (like credit cards) and installment loans (like a mortgage or auto loan) because it suggests you have the discipline to handle multiple payment schedules.
Remember, every piece of credit you manage will help build that credit history, so approach new credit judiciously.
Too many new accounts in a short period can be perceived negatively, as it may suggest financial instability.
10. Limit New Credit Accounts
When you open new credit accounts, they come with a hard inquiry on your credit report. Each hard inquiry might lower your FICO score by a few points.
But here's the kicker: new credit doesn't just affect your number of inquiries. Your length of credit history also takes a hit since new accounts lower your average account age.
So keeping new accounts to a minimum is helpful. Unless of course opening a new one will give you a 0% APR deal that lets you consolidate debt and pay down balances. Just weigh the pros and cons of any new account.
Why Does a Good Credit Score Matter?
Lenders look at credit score ranges to determine if they will lend to you and also at what interest rate. Having a great credit score may mean a lower interest rate on big accounts like mortgages and auto loans which means you will save a ton of money over the life of the loan.
Strategies to Pay Down Debt and Build Credit
Obviously paying down your debt on revolving credit accounts can help improve FICO scores. Here are some tips for reducing debt quickly.
Make More than the Minimum Payment: By paying more than the minimum monthly payment on credit cards, you reduce the principal balance faster and pay less interest over time. This can save you money and speed up the debt repayment process.
Prioritize High-Interest Debts: Arrange your debts by interest rate and prioritize paying off the ones with the highest rates first. This method, often called the 'avalanche' method, ensures you minimize the total interest paid on your debts.
Use a Budget to Plan for Debt Repayment: Tightening your budget can free up additional funds for debt repayment. Monitor your income and expenses closely, and identify non-essential expenses that you can reduce or eliminate.
Automatic Payments: Set up automatic payments to ensure you never miss a due date, which helps to maintain a good payment history—a factor that majorly influences your credit score.
Consider a Debt Consolidation Loan: If you're juggling multiple debts, a consolidation loan can combine them into a single loan, often with a lower interest rate. This simplifies your monthly payments and can save you money on interest. Paying your debt off quickly can help improve your credit score.
Balance Transfer Credit Cards: For high-interest credit card debt, a balance transfer to a card with a low or 0% introductory APR can be strategic. However, be wary of balance transfer fees and make sure you can pay off the balance before the promotional period ends to avoid higher interest rates.
Final Thoughts on Credit Improvement Strategies
Building credit and working to improve your credit is not as hard as you may think! Here is a quick recap of on strategies you can use to get a higher credit score:
Remember, your FICO score is a reflection of your financial behavior over time, and there's no instant fix. Stay patient and consistent with your efforts to build credit.
Frequently Asked Questions
What are some tips to boost my credit score quickly?
To boost your credit score in a jiffy, purchase an authorized tradeline or get added to a family member's account, download a credit building app, and pay down your debt to lower your credit utilization ratio. If you need credit repair, hire a company like Credit Saint.
Can I improve my credit score by 200 points in one month, and if so, how?
Improving your credit score by 200 points in one month is unlikely but not impossible, especially if there are significant errors on your credit report. Hiring credit repair services to dispute these errors can quickly help as can paying down debt.
How can I raise my credit score in 30 days?
To increase your credit score in a month there are a few tactics you can try. Pay down as much debt as you can, purchase a tradeline or get added to a family member's account, or download a credit building app.
What's the fastest way to boost my credit score substantially overnight?
While "overnight" improvements are unrealistic, the fastest strategy is to pay down current debt and rectify inaccuracies on your report. Substantial changes usually take time and continuous effort.
What strategies can help me achieve an 800 credit score?
Reaching a score of 800 requires long-term commitment: always pay on time, keep your credit usage low, have a solid credit mix, regularly check your credit report for errors, and avoid opening new credit lines unnecessarily.
What are the key steps to reaching a 720 credit score within six months?
To hit a 720, always make on time payments, work on reducing your overall debt, and keep old credit accounts open to lengthen your credit history. Patience and diligence will get you to your credit goal and improve your financial health.
What is the difference between a hard vs soft inquiry?
Hard Inquiries are checks made by lenders when you apply for new credit—like a mortgage, auto loan, or credit card. They can slightly lower your credit score because they imply you're seeking to take on more debt. Here's the scoop:
Soft Inquiries are checks don't impact your credit score. They happen when you check your own credit or when a lender pre-screens you for an offer.
Remember, if you're shopping for rates, try to group your hard inquiries within a short period to minimize the impact on your score.
What should I do if I get a collection on my credit file?
Getting slapped with a collections account on your credit file can drag down your score. If you've got unpaid collections, it means you've missed payments, and your original creditor has handed over the account to a collection agency. Now, even if you pay off these debts, the paid collections can still hang out on your report.
How do bankruptcies affect my score?
Bankruptcies are like the heavyweight champions of credit report damage. They signal that you've been legally cleared to not pay all or part of the amounts owed, but they involve giving up certain assets for collateral.