How To Boost Your Credit Score Fast - Advice for raising your score quickly
Updated: Feb 25
In the world we live in today, we have access to all kinds of information via the internet, applications, or technology. The hardest part is deciphering between what is fact and myth.
When it comes to your credit, there is a whole world of mystery. You may know that there are three credit bureaus out there, but did you know that none of them share the calculation that they use to determine your credit score?
That can be very frustrating when you don’t know what you don’t know, but we have learned some key elements that help to move the score. Once you understand those elements, you will know how to boost your credit score fast.
Note: If you want a really quick way to boost your credit score even faster, go to Experian®. They have this really cool feature called Experian Boost. Go there and give your credit score a quick boost today!
5 Elements That Make Up Your Credit Score
10% Credit Usage
We want to see a good mix of account types. This could be as simple as having one mortgage, two installment loans (auto, personal, or student loans), and three credit cards. The more you borrow successfully over time will increase your score.
10% New Credit
You don’t want to open a bunch of accounts in a short period of time. To the credit bureaus, this appears as a negative against you as an unforeseen circumstance could turn you upside down. Taking out too much debt too quickly could potentially plummet your score.
15% Length of Credit History
Bureaus love to see a pattern of your habits. This will show them not only that you are responsible, but that you have an ability to repay your debts as well.
30% Credit Utilization
Credit cards and credit lines are great for credit, if you use them efficiently. If all of your credit cards are maxed out, the bureaus will see this as living beyond your means. Any balance over about a 30% utilization will have a negative impact on your score.
35% Payment History
Much like your credit history, the bureaus monitor your on-time payment history. Too many late reported late payments can make your credit score take a dive!
How to Boost Your Credit Score
Now that you understand the basic makeup of the credit score, we can discuss how to to increase your credit score. After all, that is the name of the game.
In order to complete this exercise the most effectively, you will want to get access to your actual credit report. There are multiple websites like freecreditreport.com that will let you print off your whole profile.
As we move through this exercise, you have to understand that credit reports are like those mean girls in high school. They are all out there ready and willing to destroy your reputation. Those positive items that are reporting to your credit are your friends, and we need more friends than mean girls.
As you are looking at your report, you should notice a few things.
You should be looking for your current debts, balances, payment history, collections, disputes, etc. Every item on this report is an element that is playing into your reputation. Your credit score is something that takes years to build, and you can destroy it with a few terrible moves.
Enough of the pity party. Let’s talk about what you can do to boost your credit score (that is why your here right?).
8 Approaches on How To Increase Your Credit Score
Dispute the Inaccuracies on Your Report
You want to go over your report with a fine-toothed comb, and note any inaccuracy on the report. This could a debt that isn’t yours, an incorrect balance, an address, etc.
If the information is not correct on the report, you have the right to dispute that information with the bureaus. However, you will want to confirm the items that you are addressing with your own records.
If you find invalid information, the best approach to begin the dispute process is by using a good old-fashioned credit letter.
You can choose to file the dispute online, but you will have better success with a letter.
You will want multiple copies of this letter. A letter will go to each bureau that the debt is reporting, and you will keep a copy for your records. They will then have 30 days to respond to your request. If they can confirm that the information is in fact incorrect, they will then have to remove the information from your report.
Becoming an Authorized User
If you are just establishing your credit or you are rebuilding your credit, becoming an authorized user is one of the quickest ways to see a jump in your credit score.
This can easily be done by a family member, preferably with good credit, allowing you to be an authorized user on their account.
They don’t have to give you the card. They just have to be willing to let you be on the account.
Preferably you would want to be an existing credit that carries a high credit limit and a low payment. The easiest way to explain this is by giving you an example.
Say your mother is willing to add you as an authorized user to her Kohl’s card. (I’m not playing favorites here. It seems like almost everyone's mother has one of those. They may have even given it to her before she left the hospital when you were born.)
She’s had this card for years, but she doesn’t shop there very much anymore. When she does make a purchase, she simply pays the card off. This would be an excellent card to use when becoming an authorized user.
Recognizing the Negative Impacts of Authorized Users
It might not even cross your mind, but you will still want to monitor the balances that appear when you are an authorized user on an account. As the authorized user, you are not considered responsible for paying the bill, but you are accountable for the debt on your report.
Let’s say months have passed by since mom added you to her card, and you start seeing your credit score drop. Nothing has changed in your life.
You are still paying your bills on time, yet, you are just watching your score go down. You will want to check your authorized user balance. Maybe your mother forgot about your arrangement with the credit card, and she went shopping and chose not to pay the bill off. This could be impacting your score.
Here you can do one of two things. You can go through the dispute process, or you can ask to be removed as an authorized user. Keep in mind, you could still feel a small dip in your score. You will be removing the debt, but you will also be taking away the payment history and the credit history. So, you will want to weigh your options carefully.
Make a Large Lump Sum Payment to Debt
Your credit score is ultimately an evaluation on your risk. The credit bureaus have a good idea of what your income is, and they can easily see how much you owe. Your credit is 100% tied to risk. This is why the more credit you pay off, the more you boost your credit score.
Lender tip: If you are planning on making a very large payment on an installment loan that does not satisfy the debt completely, call the lender first. Some lenders might offer you a re-cast or re-amortization of the interest on the loan. This is a HUGE benefit as it can save you thousands on interest while increasing your score.
Here is an example. Let’s say you owe $150K on your mortgage, and you decide that you want to pay a lump sum of $25K toward it. You know that your current mortgage was built with the interest for the original loan amount of $200K. If this is a program that your lender offers, they will build a new payment schedule for you that is based off of your new principle balance of $125K after your payment is made.
However, they will not just offer this. You do have to ask for it, and remember that not all lenders offer it.
Correctly Utilize Credit Cards
Credit cards can be intimidating if you have no idea how to use them properly. There is an easy rule of thumb to use when determine if those credit card balances are hurting you or helping you. The credit bureaus want to see you using less than 30% of your high credit limit each month.
If you are letting your balance sit at a higher percentage then the debt is hurting you. If you are sitting below that threshold, this credit card is working in your favor.
What you don’t want to do is get into the mindset that you are going to just pay all of your cards off and close them. Just because you have a balance on this card does not mean that it has completely destroyed your reputation. (Remember the mean girls vs. your friends?)
This card may be reporting that you have a balance, but it might be also telling the credit bureaus that you have excellent payment history for 5 years. You don’t want to remove those good graces with the credit bureaus.
The only reason that you should really consider closing a card would be having an annual fee. Beyond that, keep a floating $20 balance on your cards. You don’t want to keep them at zero as their reporting will either go dormant, or the creditor will close the account due to inactivity. Just be conscious of your usage.
Charge a tank of gas or a grocery run each month, and pay it down to $20. This approach will create one of the biggest jumps that you will see in your credit score.
Request a Higher Credit Limit
After a period of time, you will build a relationship with the institutions that are offering you credit lines. They know how much of a limit they gave you, and they can see your spending and payment habits. This might prompt a conversation of increasing your credit limit.
When you have access to more credit, it will reduce the risk tied to your overall utilization of your credit cards. With that being said, this should increase your credit score.
However, please do not go crazy and attempt to increase the limits on all of your credit cards in one day. Many credit card institutions will want to reassess your credit profile. This could ultimately end up with them adding a hard inquiry onto your report.
Too many credit inquiries within a 120 day period could be another reason that your score could potentially drop. You will want to ask for the creditor’s policy regarding credit checks first before you move forward with anything.
Ultimately, the credit bureaus going to make sure that you aren’t overextending yourself when it comes to your debts. If you look too desperate for credit all at once or look like you are living out of your means, the credit bureaus will notice that there are additional risk factors that are coming into play.
Add Your Utilities
We all have bills that we pay outside of the items that are reporting to our credit reports each month that we aren’t getting credit for. It can be a bummer, because if we don’t pay those bills we end up with more than late fees. We may not have heat or power if we don’t pay them on time.
Some of the credit bureaus are taking note of this fact and letting you add those items to your credit on a month to month basis. They will read as a utility in the report description of the debt, but they will report as an installment loan that is paid off each month.
While this option is recent, it is very interesting in the way that it gives you credit for something that you are already paying for. It shows your debtor, balance, and payment history. These are all positives when we discuss how to increase your credit score
Use a Self Loan
This is one of the neatest tools that has hit the market in years. Self.inc is a service that allows you to give yourself a personal loan without having your credit ran and receiving another hard inquiry. This is great for those who are just starting out or those just looking to add variety to their credit usage.
This loan is completely customizable. You apply for this loan by providing them with the necessary information for them to create a credit reporting item for you. You choose the length of time in which you’d like to pay along with a payment that fits your budget.
Each month when you make your payment, they will report it to your credit through the credit bureaus. Once you have completed your payment schedule, the funds are unlocked and released to you. (Minus interest and fees) Understand that they are not giving you a lump sum up front.
Instead, they are creating a product similar to a CD for your benefit. You will be receiving your lump sum once the payment schedule is completed.
This is a great way to build payment history with the credit bureaus as your every step is reported. Once the “debt” is satisfied, your credit report will be noted as such. You can then choose to take complete the process again if you’d like.
Final Thoughts (Taking Action)
Now, keep in mind that some of these steps are going to move your credit faster than the others. Establishing and being consistent with good credit habits are going to be your biggest assets when it comes to continuously increasing your credit score. Remember, credit building is a multi-year process, but the wrong moves can certainly help you destroy it overnight.
Lender Tip: If you are unsure of what to do next, ask. If you are trying to get a loan, and they just tell you that you aren’t going to qualify. Ask them why.
If they simply state that your credit score is too low, ask them if they offer a Rapid Rescore option. Some lenders have the ability to run an analysis on your report that will tell them what actions can be taken to improve the credit. They should then be able to provide you with a Credit Action Plan.
Think of it this way. If I ask you to meet me at McDonald’s in the city for lunch without any details, what are the chances we are going to meet up for lunch? If I tell you what city, location, day, and time then we probably have a better chance, right?
Those same principles apply. If you are out there addressing old collections and ignoring disputes on your credit, you might never get to the credit score that you are trying to achieve. But, a Credit Action Plan can tell you which items you should address, how much you should pay or transfer, and which items you should leave alone. That is a much more efficient plan for you.
Credit can be intimidating if you have no idea where to start. It’s almost like questioning how you can continue to build your credit if nobody will take a chance on you. Whether you are just establishing your credit or trying to increase your score, take the time to review the report that you printed out.
Take what works for your situation, and ignore what doesn’t apply. Just don’t do nothing. Positive actions taken appropriately should have positive impacts to your credit score.