Your credit score affects everything from getting a favorable interest rate on a credit card to buying a home, paying for insurance and more.
If your current credit score isn’t ideal, here are ten hacks to boost your credit score quickly.
1. Dispute errors in your credit report
Because of the far-reaching impact of your credit report and the myriad ways it affects your day-to-day life, it needs to be accurate.
If there’s an error on your credit report, you’ll want to dispute it immediately to resolve the issue and avoid bad credit.
So how do you do this?
First, get a copy of your credit report, which can be found in the Annual Credit Report.
Everyone is entitled to a free copy of their credit report every 12 months.
If you find a mistake on your credit file, you should dispute it with the credit bureau that made a mistake.
After filing a dispute, the credit bureau has 30 days to investigate the issue. If the information is found to be incorrect, your credit report must be updated within those 30 days.
This source from the Federal Trade Commission walks you step-by-step through the process of disputing credit report errors.
2. Pay your bills on time
This may sound like a good idea, but it’s hard to emphasize the importance of paying your bills fast enough.
To quantify, debt payment history accounts for 35% of your credit score making it the most critical credit score factor overall.
And research has shown that a single late payment can lower your credit score by as much as 180 points.
Not only will always paying your bills on time help you build credit quickly, but it can save you money as you are less likely to have to deal with late fees with your credit bills.
If you’re struggling with this, we recommend signing up for automatic payments or setting up reminders via email or on your phone.
Once you get used to it, it should provide positive momentum for credit recovery and can go a long way toward improving your credit score.
3. Lower your credit utilization ratio
Your credit utilization ratio is, simply put, the percentage of your available credit that you are currently using.
For example, if you have $10,000 in available credit and you have $2,000 in debt on your credit card account, your credit utilization ratio is 20%.
This accounts for about 30% of your credit score, making it the second most important factor after payment history.
And that’s exactly why you should aim to reduce your credit utilization ratio.
According to Experian, “Your credit utilization ratio should be 30% or lessand the lower you can get it, the better it is for your credit score.
If you’re currently at 31% or higher, you’ll want to do everything you can to bring that number down to a maximum of 30%.
Once you do this, keep credit utilization in mind when deciding what percentage of your available credit to use going forward.
4. Request credit limit increases
This ties into our previous credit score hack.
An easy way to lower your credit utilization ratio is to get a credit limit increase.
For example, say you had $2,000 in debt with $5,000 in available credit.
You would have a credit utilization ratio of 40%, which is higher than it should be.
But let’s say you requested a $3,000 credit limit increase for a new total of $8,000.
In that case, $2,000 in debt would mean only a 25% credit utilization ratio.
Thus, you would use a smaller percentage of available credit, which should help improve your credit score.
Just be sure not to go overboard and request credit limit increases for multiple accounts at the same time, as this can signal to lenders that you may be a borrowing risk.
5. Avoid opening new lines of credit
The length of your credit history accounts for this 15% of your credit score.
The longer your credit history, the better your credit score should be in general, and vice versa.
If you follow this logic, you should avoid opening new lines of credit, as this will shorten the length of your credit history by default.
As a result, it is likely to negatively impact your credit score.
This is not to say you should never do this as it is often unavoidable, and opening a new line of credit is necessary to establish yourself in the long run.
But you should always be aware of it and, above all, avoid opening several new credit lines at once.
6. Pay off your balance
Let’s go back to the credit utilization rate, where the less percentage of available credit you use, the better.
If it’s okay to keep your credit utilization ratio no higher than 30%, it’s even better to pay off your credit card debt.
And it’s a win-win because paying off your debt not only helps build credit, but it also prevents you from paying interest.
With the average person paying $855 in interest every year, this can help you become financially healthier.
So having a zero credit card balance goal is a huge two-pronged assault to boost your credit and keep you out of unnecessary debt.
Plus, it makes you much more attractive to a credit card company.
By becoming an authorized user on someone else’s credit card (the primary cardholder), you can make purchases using the card as if it were your own.
It also means that you are responsible for paying back any debt that accumulates with the credit card.
This is another relatively simple yet effective way to boost your credit score, especially if it’s a card with a high credit limit, low credit utilization ratio, and good payment history.
In fact, some experts say it can help you get a credit score of 700 or higher after a few years.
And this is a popular way to help teens build credit.
As long as you and the primary cardholder pay off your debt quickly, this can help improve both of your credit scores at once.
In terms of who is eligible to become an authorized user, it could be anyone who meets the credit card company’s age requirements, with examples such as a spouse, partner, child, or close friend.
Ideally, the primary cardholder has a good credit history, a lot of mutual trust, and someone who wants to actively improve both credit scores.
8. Have a variety of credit accounts
Your credit mix contributes 10% to your credit score, which means it’s helpful to use different credit accounts.
Note that there are three main types of credit accounts.
- Revolving credit – Accounts that you can borrow and repay repeatedly up to a certain limit (unsecured credit card, secured credit card and lines of credit)
- Installment credit – Accounts where you borrow money in one go and pay it back in installments, usually with interest (mortgage loan, car loan, student loan, or any type of installment loan)
- Open credit – Accounts whose debt balance must be paid in full each month
If you’ve only used a few types of credit accounts or less so far, adding diversity should help you achieve good credit and make you more attractive to lenders.
Keep in mind that you can also convert day-to-day expenses, such as paying rent, into credit account types.
Hire reporting services such as BoomPay and Payment Report will report that you are making your payments on time, which can further aid in credit recovery.
9. Get a Credit Builder Loan
To put your foot on the accelerator, you can get a credit building loan strategically aimed at boosting your credit score.
Unlike a traditional loan, where you get the money up front and pay it back gradually over time, a credit building loan is different.
With this, a lender keeps the loan amount in an account and you make fixed payments.
As you make payments, you gain more access to the funds – all the while being disclosed to a credit rating agency.
This makes it a great way to show that you are able to pay on time, which can boost your credit score quickly, even without credit card.
10. Avoid closing old credit cards
Suppose you just got a new credit card and you no longer use an old one.
You should shut it down, right? Not really.
There are two main reasons why it’s wise to have multiple credit card options.
By keeping old credit cards, you have more available credit and an extensive credit history.
A lower credit utilization ratio is often associated with a higher amount of available credit.
And with a longer credit history, you’re more established – something lenders prefer over borrowers with little to no credit.
While there may be exceptions, such as paying a high annual fee, you’ll generally want to keep it because it should help you get better credit.
As you increase the length of your credit history and use a lower percentage of available credit, you can turn a low credit score into a fair, good, or even excellent one.
Many people’s credit scores aren’t nearly as high as they’d like.
Fortunately, there are several ways to boost yours and get a good credit score fast.
From disputing errors on your credit report to paying your bills on time to having a healthy credit mix, these are all integral to credit recovery and should put you on the path to good credit.