4 Quick And Surefire Ways To Raise Your Credit Score

For the most part, having a good credit score requires that you follow solid financial habits and use credit responsibly over time.  However, if you aren’t happy with your credit score, there are some things you can do to improve matters relatively quickly.

As you put your plan into action, though, you should remember that “quick” in the world of credit scoring usually means 30 to 60 days, or longer.  Don’t expect that your credit score will improve overnight, but you can get a jump start with these 4 ways to raise your credit score.

Note: If you don’t know where you stand today, here are a few ways to check your credit score for free.

1. Fix Errors on Your Credit Report

Since your credit score is based on information in your credit report, an accurate file is important.  You can get one free copy of your credit report every year with the help of annualcreditreport.com.  You can also purchase copies of your credit report.  If you have been turned down for credit, you are entitled to a free copy of your report — and the score that was used to decline your application.

Armed with your credit report, you can then find out what information could be dragging down your score.  If there are inaccuracies, get them fixed.  I once had a credit card balance and a student loan listed twice — making it look like I owed more than I did.  Fixing these two mistakes gave my credit score a little bump.

2. Pay Down Debt

One of the items that heavily impacts your score is your debt utilization.  If you are maxing out your credit cards, your debt utilization is high.  Instead, you should aim to be using no more than 30% of your available credit.  If you have high debt, do your best to make drastic inroads into your debt so that you aren’t so close to your limits — here are some tips to get out of debt if you need a little inspiration.  You’ll see an improvement in your credit score as your debt load decreases.

3. Avoid Late Payments

If you want to raise your credit score, you need to make sure you are focusing on your payment history.  This is the #1 factor considered in the FICO score algorithm.  You need to make sure that you are paying on time.  The longer your history of on-time payments, the better your credit score.  Do what you can to pay on time, and your credit score will benefit. One missed payment can ding your score if you aren’t careful; make sure that you get your payments on time.

4. Get Another Type of Loan

If all you have is one type of loan, you can improve your credit score by mixing it up a little bit.  Loans are broadly divided into two types: revolving and installment.  A revolving loan is something like a credit card; you have a limit, and you can keep borrowing as long as you make payments to stay below the limit.

An installment loan, though, is one with a payoff schedule.  You make regular payments until the loan is gone.  If you only have installment loans, you might try adding a credit card to the mix.  If you only have revolving credit, consider getting a small personal loan to pay off over time.  A little loan diversity can give your score a little nudge higher.

About the author:  Pinyo is the owner of Moolanomy Personal Finance and has written for many online publications, including American Express Currency and U.S. News Money.  You can follow him on Facebook and Twitter.


7 Responses to 4 Quick And Surefire Ways To Raise Your Credit Score

  1. MD says:

    Very insightful post. What do you have to say to 20-somethings that will justify a car loan as a means for building their credit? My friend recently did this. He purchased a car he couldn’t afford. He justified the loan by saying that it will help him build his credit.

    • Purchasing “items” that one cannot afford is a bad idea. On the other hand, using credit card to buy big items while paying on-time, and keeping a low debt-to-credit ratio will help improve one’s credit score and credit history.

  2. I have heard contradictory reports on the “ideal amount” of credit cards to up your credit card rating. I’ve always just used one and paid it off every month. Some places recommend getting two, or even three cards to boost your credit score, while still other experts will claim that having more than two cards will actually hamper your score even if you rarely use them and have never been late on a payment.

  3. Eric Putnam says:

    Your credit score formula is made up of 9 components . Based on our 30 yrs of experience it is best to build credit score with 1 card and use no more than 50% of limit at any time paid monthly toegther with an installement loan. For those Canadians who have put past credit challenges behind them and are now seeking to buy a home with an insured mortgage check out unique solution at http://www.debtcoach.ca/futurefund (1 minute video) Program combines financial coaching, unique online resources and both a credit card and an installment loan together with savings towards your future goals.

    • Fran says:

      Eric, I looked at the website you reference, http://www.debtcoach.ca/futurefund and I would not use their program simply because the website gives the information on who these people are, if the banks work with them, etc. …and they charge for their services. An entity such as this should be non-profit for me to believe that any dealings with them are legitimate and will benefit me in a way that banks recognize as positive.

  4. Stocksicity says:

    Great tips. I used to work at a financial services company (non-profit) where we did taxes for people and did a credit check if they asked for one. Always used annualcreditreport.com. Too many people believe that it’s not free.

    I should be getting my report again this year around November or December (forgot when I got it last year, it’s around here somewhere).

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