Anyone can boost a credit score fast. In this article, we’ll show easy steps including how to monitor and fix a credit report and how to establish small lines of credit and use them responsibly.
While “fast” is relative and results can take 30 to 60 days to come online, a bad credit score doesn’t have to linger for several months or years.
Boost a Credit Score Idea #1: Know Your Score
The easiest way to boost a credit score? Know your exact score, and what it means.
Excellent credit. A credit score is a 3-digit number, usually between 300 and 850. Image source: CreditKarma.com
A credit score is a number between 300 and 850; the higher the better. Banks, stores, car dealerships and so on look at it to determine whether someone’s likely to pay back borrowed money.
Credit scores are compiled from a consumer’s personal credit history. Therefore, the best way for individuals to understand and fix their credit scores is by looking first at their credit histories.
Credit histories are also called credit reports. Everyone is entitled by law to a free look at their credit report once per year.
There are three major agencies that compile credit reports. These agencies are Equifax, Experian, and TransUnion. They’re required by law to let consumers look at their credit reports one time per year.
AnnualCreditReport.com is the only website approved by the US Government to distribute the reports from all three agencies once a year to each U.S. citizen for free. Consumers who want to view their free credit report just need to visit AnnualCreditReport.com and fill out their online form. A good idea is to look at a report from a different credit reporting bureau every four months. For example, Julie looks at her TransUnion free credit report in January, her Experian free credit report in May, and her Equifax free credit report in September. This way, she’s never more than four months away from an understanding of her credit health.
Related: What’s a Good Credit Score?
How to See a Credit Score for Free
Traditionally, though consumers could view credit reports for free, they had to pay to view their credit scores. However, it’s getting easier all the time to see free credit scores. Many credit card companies let their customers view their scores for free online. Also, CreditKarma.com lets people see their Equifax and TransUnion scores for free. Whatever method a consumer chooses, monitoring the credit score is crucial. Knowing exactly why someone has been turned down for a loan or other line of credit is the first step to fixing the problem. Also, knowing the credit score is the first step to raising it.
Understanding the Credit Score
A screen grab from Transworld Systems — one of the largest collection agencies in the U.S.
A credit score is affected by the following:
- Credit Card Payments
- Mortgage Payments
- Car Loan Payments
- Being Reported to Collection Agencies
- Negative Rental History (If Reported by a Landlord)
- Taxes or Other Leins
- Late Utility Bill Payments
A credit score is not affected by:
- Prepaid Debit Cards
- Steady Employment
- Loan Pre-Payments
Reading through credit report with the above items in mind can provide a much better idea of the actions necessary to improve a credit score. It also gives a good sense of what won’t help. For example, holding down a job for ten years straight does nothing to boost a credit score. Likewise, losing a job won’t hurt a score.
Related: Best Rewards Cards for Consumers With Excellent Credit Scores
Boost a Credit Score Idea #2: Dispute Errors in Your Credit Report
When you check your free credit report, look for mistakes. It might be that someone reported you for something you didn’t do. This could be a credit card you applied for, then cancelled, but the company kept charging annual fees anyway. It could also be a rent payment you actually made but that your landlord says you didn’t. Disputing errors might not get them fixed, but mistakes certainly won’t get corrected without trying.
Here’s part of a sample credit report from Experian. To see the full report, just click the image.
Boost a Credit Score Idea #3: Negotiate Items in the Credit Report
Maybe a debt owed to a collection agency is dragging your score down. If that’s the case, call the collection agency and make a deal. Agree to pay off the balance if they’ll agree first in writing to remove the bad debt from your report. It should at least be possible to get the item marked as “paid in full.”
Maybe you missed a couple credit card payments a few months ago and that’s causing you trouble. If you’ve always had a good credit history in the past, you might try calling the credit card company and asking them to erase the bad marks — after you make the payments, of course.
Boost a Credit Score Idea #4: Establish Some Credit
Any credit card will help a consumer build a good credit history and credit score, if used responsibly.
It’s impossible to improve a credit score without building credit. That may seem like a catch-22, because you need a good credit score to get credit, right? Yes and no. You need a good credit score to get big credit, like loans for a house or a car, or a high-limit credit card. But just about anyone can get small lines of credit, and even those will boost a credit score if used correctly.
Some Credit Accounts That Will Improve a Credit Score:
- Credit Card
- Secured Credit Card
- Retail Card
- Gas Card
- Loan Secured by Property Like Car or Furniture
Let’s look at each of those below.
Credit Card
If a person’s credit score is terrible, it might seem like they get a credit card at all, but there are a few options.
First, they may be able to get a low-limit credit card. Even a low-limit card will help to boost a credit score if used responsibly.
If that doesn’t work, someone with good credit can co-sign for a low-limit card. That way, the lending institution trusts that even if the cardholder doesn’t pay back what they owe, the trusted co-signer will make sure it gets done.
Secured Credit Card
USAA’s secured credit card is one of many secured cards that will help improve a sagging credit score if used responsibly.
Those who can’t get a regular credit card should consider getting a secured credit card. A secured card works just like a regular card, except it requires a security deposit up front, and the amount of that deposit determines the card’s credit limit. Secured cards work something like prepaid cards, except unlike with a prepaid card, a secured card improves a credit score as a consumer uses it and then pays it off monthly. Responsible use of a secured credit card will boost a credit score.
Retail Card/Gas Card
Exxon’s gas card offers a line of credit at selected gas stations.
Retail cards and gas cards are basically credit cards, but for specific businesses. A gas card provides a line of credit at selected gas stations. A retail card might be good at certain stores. There are grocery cards, too. Any of these are good low-level lines of credit, and any will help to boost a credit score.
Loan Secured by Property
Small loans can be secured by personal property like a car. These are another way to take small steps toward establishing good credit.
WARNING: Too Much Credit Can Hurt
Creating one or two small lines of credit goes a long way. However, some consumers make the mistake of applying for several lines of credit all at once. Doing that will make the reporting agencies think they’re desperate for money, and that they’ll likely over-borrow. This can hurt a credit score more than it helps.
Likewise, getting turned down for a loan by one bank, then trying several more banks in a row will hurt a credit score. That’s because, again, it makes the borrower look desperate, and like they might not be able to pay the money back.
The fine print on this point? Each new credit application generates an “inquiry.” Each inquiry puts a mark on the applicant’s credit report. Too many of these marks will hurt a person’s score. The good news is, this factor has a low impact on credit scores. It’s also very temporary, lasting only a month or two. Therefore, someone who has recently made a lot of attempts to open up new lines of credit can boost a credit score just by taking a break from applying for new accounts.
This portion of a sample credit report from Experian shows inquiries or “requests for credit history.” To view the full sample credit report, click the image.
Boost a Credit Score Idea #5: Use New Credit Responsibly
Using credit responsibly is a “balancing” act. It’s mandatory to use credit in order to boost a credit score. However, it’s also vital to pay off the balances on time, in total if possible, and monthly. Paying off debt faithfully sends the message that the borrower can be trusted to repay any money loaned to them. This level of trustworthiness will be reflected in the person’s credit score.
Have trouble making on-time payments? A repeating reminder with an alarm that triggers a couple days before a credit card bill is due can help.
Second, credit should be used sparingly. Using 100% of a credit account every month looks bad, even if it’s paid off entirely each month as well. That’s because it looks like the borrower isn’t in control. Ideally, people should use about 30% or less of their available credit. 20% is better, and 10% or 5% are better still. Doing this will demonstrate that the borrower is in control.
In some cases, a consumer will need to use more than 5% to 30% of their available credit. Take John, for instance. He travels all over the country for business, so he racks up $2,000 every month. He isn’t blowing out his budget because his boss always reimburses him for travel. However, since John’s Master Card has a $4,000 limit, he continually uses 50% of his available credit for that account. This hurts John’s credit score.
Someone in John’s situation should consider asking the credit card company to raise their credit limit. A limit of $10,000 wouldn’t be unreasonable in John’s case, and it would get his credit utilization ratio down to 20%.
Related: 6 Surprising Ways to Hack Your Credit Score
Boost a Credit Score Idea #6: Pay Down Credit Card Debt
Paying down credit card/revolving loan amount fast can really help. Someone with a $9,000 balance across multiple credit cards with a combined limit of $10,000 has a 90% credit utilization ratio. That’s a signal to the banks that the person may be having a hard time making ends meet. Paying down $5,000 of that debt immediately drops the credit utilization rate to 40% or $4,000 out of $10,000. That can have a huge impact on the credit score boosting it by solid double digits.
Boost a Credit Score Idea #7: Have Your Spouse Add You as an Authorized User
A consumer with a good credit score who adds their spouse as an authorized user on one or more frequently used credit cards can boost their spouse’s credit score. The downside is that while the authorized user’s credit score will go up, the credit score of the spouse who adds the user may go down.
Adding someone as an authorized user can take them from having no credit history or a damaged credit history to having a ten year American Express card account in good standing on their credit report – a significant boost. Just be warned that it can also take someone with a good credit history and give them the black marks on the authorized user’s report, too.
In Short:
Consumers who need to boost a credit score fast can take heart and try the following ideas:
- Keep an eye on the credit score.
- Dispute errors on the credit report.
- Negotiate any black marks on the credit report.
- Establish some credit.
- Use credit responsibly, less than 30% per month, and paid off on-time and every month, in full.
- Pay down existing credit card debt.
- Get added as an authorized user to existing accounts.
People who can do these things consistently can turn a low credit score into something they can be proud of in a relatively small amount of time.