An excellent credit score is key to better financial opportunities, such as lower interest rates and more accessible loan and credit card approvals. Improving it may feel like an arduous process, so you might wonder how to raise your credit score quickly.
This blog will share actionable strategies for building credit fast and increasing your credit score effectively.
If you want to make a big purchase soon or improve your credit score, stick around for some simple tips on how to increase your credit score quickly.
Key Takeaways
- To build credit fast, focus on establishing a record of on-time payments, keeping balances low, and avoiding unnecessary hard inquiries.
- Monitor your credit report for inaccuracies and dispute any that could affect your credit score.
- Keep your credit utilization ratio low.
What Is a Credit Score and Why Is It Important?
A credit score is a 3-digit number that creditors use to determine and evaluate your credit behavior and financial habits. There are several models for calculating credit scores, with FICO being the most popular.
A credit score paints a picture of your creditworthiness and helps lenders decide whether you get a mortgage or a credit card, as well as the interest rate. Credit scores can also influence:
- Insurers premiums for auto and homeowners coverage.
- Some landlords check credit scores to determine who gets to rent their apartment.
- Some employers use credit history for background checks—especially when the job involves finances.
How To Raise Your Credit Score: 7 Tips
Raising your credit score provides many benefits, and most importantly, it’ll improve your overall financial life. Here’s how to boost your credit score.
1. Keep Your Accounts Active
15% of your credit score is based on how long you’ve had credit. If you’re looking for practical tips on how to raise your credit score, keeping old accounts open is an excellent starting point.
Closing a credit card—especially when it’s an old account—can reduce your credit score. Here are tips to keep an account active without incurring extra fees:
- Use the card for small purchases such as buying coffee
- You can also add your recurring monthly bill payments to the card
- Pay off your full balance every month to avoid interest charges
However, if the credit card has an annual fee, contact your card issuer to explore options for upgrading or downgrading it. This way, you can retain your credit history while switching to a more suitable card.
2. Ensure on Time Payments
Debt payment history makes up 35% of your FICO® Score☉ and is arguably the most important credit score factor. Your payment history is comprised of all the times you made payments on time, were late, or missed payments. So, on-time payments improve your credit.
Even when you miss a payment, you can reduce how much it impacts your credit by paying the outstanding balance immediately.
Then, ask your creditors not to report the missed payment to the credit bureaus. This will likely work if this is a one-time occurrence and you have a record of on-time payments.
But if the creditor disagrees, you should still bring your account up to date as soon as possible. Each month, an account is marked for late payment, which hurts your score. Going forward, automate your payments to avoid missing payments. You can create calendar reminders and alerts through your online account or phone so you get notifications about your payments.
3. Use Utility Payments To Boost Your Credit
Typically, utility payments aren’t reported to credit bureaus, so they don’t directly impact your credit score. However, you can add this to boost your credit score by linking your bills like monthly rent and cell phone service; you can get credit for positive, on-time payments.
TransUnion found that including rent payments in credit reports raised consumers’ credit scores by nearly 60 points.
For example, Experian Boost allows you to add utility bills such as electricity, gas, sewer, insurance, internet, cable, and so on to your credit file.
These payments will then be added to your credit history and considered in your credit score utilization. Examples of bureaus you can use to report your utility payments are Rentreporters, Boom, and Level Credit.
4. Opt For Credit Limit Increases
Increasing your credit limit can improve your credit score by lowering your credit utilization ratio (This is the balance compared to your total available credit).
Low credit utilization demonstrates responsible credit use and shows lenders that you are financially responsible. So, increase your credit limit while keeping credit utilization low – preferably below 30%.
This advice might contradict the below step because a credit limit increase also leads to hard inquiry, which can cause a dip in your credit score. However, the long-term benefits of increasing your limit with proper financial management outweigh this initial effect.
Here’s how to calculate your credit utilization ratio:
- Add up all the balances on your credit cards
- Divide the total balance by your credit limit
- Multiply your answer by 100
For example, if your total balance is $3,000 and your credit limit is $15,000, your credit utilization ratio is 20%. If you increase your credit limit to $20,000 while your balance remains $3,000, your ratio drops to 15%.
If your income increases or you’ve had years of positive credit history, you’re likely in a good place to request a higher credit limit. But, before asking for an increase, create a plan to keep your spending habits in check and avoid using the extra credit.
5. Don’t Apply For New Credit While Trying To Repair Your Credit Score
A new credit application means the lender will carry out a “hard inquiry” – a credit check to evaluate your creditworthiness. It involves pulling your credit file and is standard for applications like credit cards, loans, or mortgages. This type of inquiry stays on your credit report for up to two years.
A hard inquiry can lower your score because it indicates to lenders that you’re in financial distress, mainly if multiple inquiries are made quickly.
This contrasts with soft inquiries, which happen when someone reviews your credit report without a credit application, such as during a background check or pre-approval process. Unlike hard inquiries, soft inquiries don’t affect your credit score or remain on your record.
6. Become an Authorized User for Another Account Holder
When trying to increase your credit score, having a loved one with an excellent credit score adds you as an authorized user on their credit card, which can immediately have a positive impact on your credit score. This is an excellent tip for anyone looking to raise a credit score fast.
For this to work, you need someone with a high credit limit, less than 30% credit utilization ratio, and a history of on-time payments.
Ensure the account reports to all three major credit bureaus (Equifax, Experian, and TransUnion). You can ask your parents or other loved ones. This person doesn’t have to let you use the card or provide access to their account to help your credit profile.
When you’re added as an authorized user, the card issuer will report the entire history of the account to the credit bureaus within a month or two, giving you the boost you need.
7. Use A Credit Builder Loan
A credit builder loan is specifically made for individuals with low credit scores, providing an opportunity to demonstrate creditworthiness. Before committing to a credit builder loan, review the loan terms, including the loan amount, repayment schedule, and interest rates, to ensure the plan fits your budget.
Each payment you make is reported to the three major credit bureaus, which means your positive payment history will help boost a low score or build a new credit profile.
To maximize the benefits of the loan, avoid late payments, as these can negatively impact your credit score. Once you’ve successfully made all your repayments, you’ll not only have established a good credit history with the lender but also gain access to the total amount you initially borrowed.
Boosting your credit score might seem challenging, but it is achievable if you are determined. As you embark on this journey, remember that every small step counts. Remember to:
- Keep your accounts active.
- Ensure on-time payments.
- Report your utility bill payments.
- Increase your credit limit while keeping your usage minimal.
- Don’t apply for a new loan or credit except with a plan, such as increasing your credit limit while keeping your utilization low.
- Ask your family or friends to make you an authorized user in credit accounts.
- Be committed; soon enough, you’ll see improvements in your credit score and gain confidence in managing your finances.
FAQs about Increasing Credit Score
How Can I Raise My Credit Score in 30 Days?
If you’re wondering how to increase your credit score fast, paying off debt and reducing your credit utilization ratio are great short-term strategies. Ask a friend or family member with an excellent credit profile to make you an authorized user on their credit card account to improve your score. Other short-term strategies you can use include reporting your utility bills and checking and reporting any inaccuracies in your credit report.
How Do You Get a 720 Credit Score in 6 Months?
To achieve a 720 credit score in six months, make timely payments and reduce credit card balances to keep your credit utilization below 30%. Decide on a debt repayment strategy. Examples are the debt snowball or avalanche method. Depending on your debt repayment method, make monthly payments until all your debts are paid off. You can also make more than one monthly payment to help reduce your debt. These will boost your credit score.
What Increases Credit Score Fastest?
You can improve your credit score by:
- Making payments on time.
- Creating and sticking to a debt repayment strategy for your loans and credit card debts.
- Keeping your credit utilization low
- Monitor your credit to avoid fraudulent activities and dispute any inaccuracies. You can get a free annual report from each bureau through Annual Credit Report.