How to Improve Your Credit Score

March 13, 2020 | by Jacob Hamilton

how to improve credit score fast

While having an excellent credit score can open a lot of doors, having a bad credit score can slam them shut. Which, if you’re buying a home, leasing a car, or applying for a new loan or credit card, is the last thing you want.

If you have a lower credit score than you’d like, don’t panic. Despite what people say, there are ways that you can work to improve your bad credit score—even in a short amount of time. To start off with, here are the five factors that affect your credit score:

  • Payment history: how many on-time and late payments you've made.
  • Current debt: how much overall debt you have (loans, credit card debt, other credit accounts).
  • Length of credit history: how long you've had your lines of credit (the longer the better, in most cases).
  • New credit requests: soft and hard inquiries on your credit report.
  • Credit mix: how many different types of credit you have (more diverse is better).

Five Factors that affect credit score - payment history, amount of debt, length of credit, new requests, and credit mix

Potentially, you can use these five factors to improve your credit score. Although there's no quick fix to completely repair your credit immediately, we’ve put together a few simple strategies you can use to raise your credit score at least a little bit.

A quick disclaimer: none of our tips are guarantees.

7 Ways to work to Improve Your Credit

Unfortunately, there isn’t a magical shortcut to awesome credit. The actual amount of time it'll take to improve your credit will depend on your financial situation, but our tips below are good places to start.

Effective Ways to Improve Overnight

Strategy #1: Increase the Scope of Your Credit Data

You may be able to raise your credit score quickly by taking advantage of alternate credit score calculation models.

Typical credit scoring only factors in credit-specific accounts, like bank loans and credit cards. With alternative models, you can add supplemental non-credit information that may boost your score immediately,

some credit models allow you to add supplemental data to your score: rent, water & electric, cell phone, bank statements

You can sign up for products that allow you to add supplemental information to your credit score calculations immediately:

  • FICO’s UltraFICO Score: a new type of credit score that combines data from Fincinity and Experian. It uses more information than your regular FICO score, including your voluntarily supplied banking data. The UltraFICO score will report how long your banking accounts have been open, the frequency of withdrawals and deposits, and whether there’s evidence of saving in your accounts.
  • Experian Boost: uses your bank records to look into your eligible utilities payments over the past 24 months—things like phone plans, water, and electric bills—and includes the positive records in your credit score calculations. As a bonus, you can remove the information any time, in case you fall behind on your bills.

Note: Keep in mind that each lender uses different credit scoring methods, and may not use the FICO or Experian scoring methods.

Effective Ways to Improve in a Month

Strategy #2: Correct Existing Errors

A month is typically how long it takes to settle a credit dispute. Successfully disputing an item on your credit report could potentially lift your credit score.

In order to correct your errors, you’ll first need to know what’s on your credit reports. You can request your annual free credit reports from the three big credit reporting agencies (TransUnion, Experian, and Equifax) at AnnualCreditReport.com, and then check them thoroughly.

mistakes on your credit report can lower your credit score

If you’ve already requested your free credit reports for the year, or if you just want to make sure you’re being as vigilant as possible, consider credit monitoring. While many credit card issuers and banks offer free credit score reports, with a paid service you’ll get specific updates about your credit score, making it easier to spot errors.

As soon as you spot an error, you should dispute it to so it will not unfairly impact your credit. These are the are most likely to affect your score:

  • Incorrect account balance or status (open, closed) information
  • Incorrect payment records
  • Accounts that are not yours
  • Duplicate accounts (accounts accidentally reported more than once)
  • Previous missed payments that are more than seven years old

You should hear back on a dispute with a major credit bureau within 30 – 45 days’ time. If your dispute is rejected, the dispute will not negatively impact your score. If the error is corrected and you have not added any other negative information, you should see an improvement in your score eventually.

Strategy #3: Lower Your Credit Utilization Ratio

Your credit utilization ratio is your credit balance divided by your available credit, converted to a percentage. It can be calculated based on total credit or per-card, so your different credit card balances may individually reflect different credit utilization ratios.

Your credit utilization ratio is the debt you currently have divided by your credit limit

Most experts will agree that the ideal credit utilization ratio is 30 percent or less, whether you’re calculating it per card or overall. This means that, at any given time, you should owe 30 percent or less of your credit limit.

When trying to raise your credit score, remaining below this ratio (or getting as close as possible) should be one of your goals—and you might be able to get there in a month.

There are a few ways to do this:

  • Make multiple credit card payments throughout the month if you can. This way, your utilization ratio will be lower by your next statement.
  • Petition your creditors to increase your credit limits if you’re confident in your ability to refrain from overspending. This enables you to lower your credit utilization ratio by your next statement without making increased payments. (A word of warning: if you end up overspending on those new limits, you may be worse off than before).
  • Consider consolidating some debt, whether by contacting your lenders directly, taking out a personal loan from friends or family, or working with a credit consultant.

Assuming your credit report has stayed the same, lowering your utilization rate could increase your score in one to two months.

Effective Ways to Improve in a Year

Strategy #4: Pay Your Bills on Time

This may seem like a no-brainer, but understanding how late payments impact your credit score is crucial to making decisions that will raise your score. A missed or late payment won’t affect your credit score immediately, but once it’s 30 days past due, your credit report and your credit score will both be impacted.

The longer you wait, the worse a late payment’s effect on your score will be, so if you’re making plans to improve your credit over a year, focus first on your most seriously delinquent accounts. Consider setting up automatic payments for your open accounts and starting a conversation with your lender or credit card issuer to see if they'll forgive your late payments. From there, make on-time, full credit card payments your priority.

If you focus on consistency in your payments, your credit may not jump drastically from month-to-month, but it will improve steadily over the year in a lasting way.

Long-Term Improvement Strategies

Long-term credit improvement is less about activities that can raise your score and more about avoiding mistakes that can damage it. Focus on maintaining positive financial habits you’ve established and continuing to develop new ones.

Strategy #5: Avoid Applying for New Credit

If you’re focusing on credit improvement, you should put a hold on any applications for new credit cards, loans or other lines of credit. Each new application will add a hard inquiry to your credit report, which will lower your credit score.

Many people get confused by this rule, because increasing your overall credit limit decreases your credit utilization ratio, which can help improve credit scores. However, it’s not worth adding hard inquiries to your report just to bring down your utilization rate. Instead, try asking for a credit limit increase with your current creditor—the credit checks performed on existing accounts only result in soft inquiries against your report.

Strategy #6: Keep Unused Accounts Open

When cleaning up your credit it can be tempting to cut up and close out old accounts after paying them off. However, it’s better to leave unused accounts open, since having a higher overall credit limit makes it easier to keep your credit utilization ratio low.

The only time you should close unused credit accounts is when they come with an annual fee. If you’re paying to own a credit card that you’re no longer using, make sure you’ve paid it off and then close it out.

You can still cut up the cards for accounts you no longer plan to use. Just leave the account itself open and keep an eye on it to make sure no charges come up on your monthly statements.

Strategy #7: Hire a Professional

If your credit is a mess and you feel overwhelmed by the amount of debt you’re carrying, you may be a good candidate for credit repair. Though anyone can improve their credit on their own using the strategies above, a credit consultant has a few additional abilities, like negotiating with creditors to set lower payments and longer pay periods.

Having a professional draw up a credit improvement plan can also be helpful for those who aren’t confident in their own financial skills to introduce another level of accountability and keep their credit improvement efforts on track.

How Much Can My Credit Score Improve?

Really? It depends on the score you started with when you began to improve it.

It’s realistic that making the changes outlined above could help you raise your credit score by 100 or even 200 points—but it all depends. If you’re correcting pre-existing bad credit behavior, the likelihood that a couple of changes will impact your credit score increases

How to Build Credit from Scratch

If you’ve never had a credit card or loan before, you may be looking to start building credit from scratch. In this case, many of the strategies above will still apply: making steady, on-time payments over a long period of time is always the best way to establish healthy credit.

However, beginner borrowers also have a few extra tools at their disposal that can help ensure you’re starting your credit journey on the right foot.

hacks for building credit from scratch

It may seem counterintuitive, but the only way to build good credit is to take on debt. The key is to only take on as much debt as you can handle. Here are some ways to build credit from scratch:

  • Get a credit card that fits your needs: Many credit card companies offer starter cards like secured credit cards (where your initial deposit is your credit line) and student cards (with low interest rates and small credit limits). These can help you get into a borrowing habit while minimizing the risk of overspending.
  • Pay your bills on time: You don’t have to carry a balance on your credit card to build credit. So, if you can, you should always, always pay your balance statements on time and in full.
  • Apply for a credit-building loan: While you might also apply for credit like student loans or auto loans, a credit-building loan is a great way to safely build your credit. With this type of loan, the bank deposits funds into your account that you repay in increments— especially safe if you pick a dollar amount you know you can reach easily.
  • Become an authorized user on another account: Ask a trusted friend or family member to allow you to become an authorized user on their credit card. You can leverage their established credit, and your credit will positively build from their good credit as you make purchases—provided that payments continue to be made on time (which they should because otherwise that would be rude, right?).

Getting Help to Improve Your Score

While these tips are good places to start, they aren’t a guarantee of improvement. Your report and score are dynamic. For example, even if you lower your balance to zero, but incurred a late mortgage or rent payment to do that, your score may stay the same or get worse.

When you’re starting with a low score, credit repair can seem impossible. Like interest, your bad credit issue can get worse more quickly than it can get better, especially when having a poor credit score affects your ability to be approved for better repayment options everywhere else.

The good news is that you don’t have to figure it out alone. Instead of panicking, enlist the services of a professional credit consultant. They can help you create and execute a foolproof game plan for raising your credit score and keeping it high.

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