Consumer Comeback Blog

How to Improve Your Credit Score Fast

Written by Jeffrey Trull

fast-improve-credit-scoreCredit scores are constantly changing, for both the good and the bad. In fact, your score may be adjusted any time there’s an update to your credit report. Opening up a new account, paying down balances, or anything else that normally affects your credit score can cause a change at any time.

Everyone wants a better credit score, and most of us want to get there fast and before applying for the next loan. If you need to improve your credit score quickly, here are the best places to look for changes that can up your score fast.

Start with opening a credit card

When looking to improve your credit score, you need to start with the basics. The first place: owning a credit card if you don’t already.

Credit cards are a great tool for building credit since they impact almost every part of how your credit score is calculated, making having at least one account nearly essential. By opening a credit account, you’ll have the ability to improve all these areas within a short period of time.

Just about anyone can open a credit card account today. If you already have good credit, you’ll have plenty of credit card options to choose from for moving your credit score up even further. Even if your credit isn’t so great, you can choose from secured credit cards that let you build credit in exchange for leaving a deposit equal to your credit limit.

Get mistakes removed from your report

Credit mistakes you’ve made in the past are often irreversible, and you’ll have to live with them for years. But you should watch out for other mistakes on your credit report: history that’s misreported and incorrect.

It’s possible that, somewhere along the line, incorrect information was reported by your creditors. This faulty information could be harming your score at no fault of your own.

Request and examine your credit reports from all three bureaus to see if there are any obvious errors. You can cross-check each report to make sure the information is consistent. If anything doesn’t match up or looks off, examine the issue more closely. If you’re still uncertain, call up the creditor responsible for that account and ask for more information.

If you spot any errors, make sure to contact your credit issuer and asked to have the problems fixed. Follow this process for disputing a credit report error, and you’ll hopefully be on your way to an improved score.

Pay down balances

Paying down your outstanding balances is likely to have a near immediate and positive impact on your credit score. Credit utilization and amounts owed makes up about 30% of your FICO score, so lowering balances typically has a positive effect on your credit.

Those maintaining high balances on credit cards are viewed as a higher risk. Experts recommend keeping balances below 30% of your total available revolving credit, with below 10% being even better.

A good time to consider paying down this debt: If you suddenly have a cash windfall. Maybe it’s an unexpected holiday bonus, tax refund, or inheritance. Applying money to pay off a chunk of your debt will take bite out of your amount owed on credit and hopefully lift your score.

Settle with debt collectors

Working out debts that go into collections is an important step to help clear your record. In fact, if you’re successful at negotiating, you can get negative information wiped off your credit report altogether.

To do this, you’ll have to work with the debt collection agency that may have been hounding you with phone calls. But the good news is that you can negotiate with a debt collector to lower the amount they’re demanding while also requesting removal from your credit history as part of your negotiation. There’s no guarantees that they’ll agree, but the possibility is there.

Increasing your credit score by eliminating details of a debt collection on your credit report could be worth thousands of dollars in interest through a better rate if you’re shopping for a home mortgage, so don’t get too stingy or stubborn with paying off debt held by collectors.

Keep credit cards active

The hype about keeping old credit cards is at least partially true: older credit accounts matter. Age of credit history accounts for about 15% of your credit score, including the average age of accounts on your credit report, so keeping the old accounts from going dormant or from being closed is important to keep this average up.

Keeping credit cards fresh is simple: just use them for one purchase a month. I like to set up a recurring monthly payment for a subscription, like Netflix or the gym, on my older credit cards. Then I simply pay off this low balance when when the bill comes due each month. I can use my newer cards, which may be better for rewards, while still keeping the old ones active.

Keep history strong

Related to old accounts, opening new credit accounts might affect your credit score.

It’s likely that opening a single account won’t have a huge affect on your credit. However, you are risking significant points if you attempt to open several new accounts at once. The reason: Fair Isaac, which is responsible for issuing FICO scores, views this as risky behavior.

Instead, keep the opening of new accounts a bit spread out, and you’ll hopefully see your credit score rise as you decrease credit utilization with new accounts.

Improve your habits

If you’re constantly late on paying bills for credit accounts, that needs to change immediately or your score will keep moving in the wrong direction.

Payment history makes up about 35% of your credit score, so being perpetually delinquent on your accounts can seriously harm your credit. Defaulting or being sent to collections makes matters even worse.

There’s no reason to keep these bad habits if you’re serious about improving your score. Set up automatic payments for at least the minimum payment, or look to software and services, like ReadyForZero, that help you pay off debt efficiently and systematically.