Building good credit doesn’t happen overnight, and it can take years to establish a solid credit history. But if your credit score is in bad shape, there are a few things you can do to potentially raise your credit score fast – in as little as a month.
Depending on what your credit report holds, quick credit-boosting strategies might include addressing the issues that are causing your low score in the first place, or adding a lot of positive information at once. These methods won’t turn bad credit into great credit overnight, but they can potentially lead to a noticeable improvement – and fairly quickly.
Here are three legitimate options if you’re looking to raise your credit score fast.
1. Lower Your Credit Utilization
Your credit utilization, which is your credit card balances divided by your credit limits, makes up 30% of your FICO credit score. A high utilization rate can signal to lenders that your debt situation is unmanageable.
To give you an idea of how credit utilization works, let’s say you have three credit cards:
- Card A: $1,500 balance; $2,000 limit
- Card B: $5,000 balance; $5,000 limit
- Card C: $1,000 balance; $10,000 limit
FICO will calculate your utilization rate for each card plus the rate across all of your cards:
- Card A: 75%
- Card B: 100%
- Card C: 10%
- Overall: 44%
While some credit experts recommend keeping your utilization rate at 30% or below, there’s no hard-and-fast rule beyond this one: the lower, the better. And since your credit card companies report your balances every month, paying down one or more balances can cause your credit score to bounce back once the new balance — and lower utilization rate — is reported.
Another strategy for lowering your utilization rate involves being removed as an authorized user from credit card accounts with high balances. If, for example, you’re an authorized user on your spouse’s account, and the card carries a high balance, consider calling the card issuer and asking them to remove you from the account, at least temporarily. Once that goes through, the high balance won’t impact your credit score anymore.
Finally, if you don’t have the cash to pay down your credit card balances, you could consider using a debt consolidation loan to achieve your goal. While you’re not reducing your overall debt load this way, credit scoring models don’t treat installment debt the same as revolving debt (e.g., credit card balances). So paying off your cards with a loan will result in a 0% utilization rate once those new balances are reported.
2. Get Added as an Authorized User
Whereas an authorized user account with a high balance can hurt your credit, getting added to a card account that’s in good shape can help big time.
That’s because the entire history of the account will be included on your credit report. So if the card has a low utilization rate and a perfect payment history, and it’s older than your existing accounts, it could boost your credit score as soon as the credit card company starts reporting it.
Keep in mind, though, that getting added as an authorized user on someone else’s account requires mutual trust. As an authorized user, you get your own credit card tied to the account, but you’re not legally responsible for making any payments to the credit card company. So it’s important to talk to the primary account holder and decide the terms of the arrangement.
Also, it’s best to ask a family member or friend for an authorized user account. While there are paid services out there that allow you to get an authorized user account from a stranger with good credit, it’s very expensive and occupies an ethical gray area.
3. Remove Erroneous or Fraudulent Information from Your Credit Report
Accidents happen, and sometimes creditors or credit bureaus add something to your credit report that’s not correct. Even worse, your credit predicament may be partially due to fraudulent activity with your personal information.
Get a copy of your credit report and review it for any accounts or information you don’t recognize. Keep in mind that there may be some legitimate negative information in your report that you don’t know about, so check with the creditor to find out more.
But if you determine that the item is erroneous or fraudulent, you can dispute it directly with the credit bureaus. While a dispute can take up to 30 days, Experian states that the turnaround time is usually 10 to 14 days.
Once that negative information has been removed from your report, its influence on your credit will no longer exist, and you may see a bump in your credit score.
Other Ways to Improve Your Credit
While these three actions have the potential to raise your credit score quickly, it can still take time to get your credit where you want it. You don’t need a perfect credit score, but to qualify for the best rates on mortgages and car loans or the top-tier rewards cards, you’ll want to get yours to 760 or better. Here are some other things to focus on to achieve your goal over time.
Establish a Perfect Payment History
Your payment history is the most important factor in your FICO score. And while late payments and collection accounts may have already done some significant damage, getting caught up can stop the bleeding.
Also, credit scoring models typically give more weight to more recent activity. So as you get caught up on payments and stay that way, your new positive payment history will outweigh past delinquencies over time.
Use Your Credit Cards Responsibly
Once you achieve a low utilization rate on your credit cards, it’s essential that you keep it that way. That can be tough if you have a low credit limit, so you may need to primarily use cash and your debit card for a while.
Alternatively, you can use your credit card as normal but make multiple payments throughout the month to keep the balance low. Whichever approach you choose, keep an eye on your balance and make sure it stays relatively low compared to your limit.
Avoid Unnecessary Borrowing
Every time you apply for a loan or credit card, the lender runs a hard inquiry on your credit report. For most people, this will only knock a few points off your score. But combined with other negative items on your credit report applying for several credit accounts can still be a red flag.
Also, avoiding new accounts will help improve your average age of accounts, which contributes to your overall length of credit history. That factor makes up 15% of your FICO credit score.
Don’t Give Up
Building credit takes time, and it’s easy to get discouraged if you don’t see immediate results. But the result is worth the work.
Having a great credit score can not only make it easier to get approved for credit with favorable terms, but it can also help you score lower insurance premiums and get approved for a good apartment.
As you establish good credit habits, you’ll not only have a chance to improve your credit score, but it’ll also be easier to keep it that way.