How to improve your credit score quickly
There’s plenty of advice out there on how to improve your credit score, but the problem is that the methods often take months or more to have an effect. What if you don’t have that long? Perhaps you’re trying to give your score a quick boost before applying for a loan, or you have another reason you need your score increased right away. Fortunately, there are a couple methods that can increase your credit score in a much shorter span of time.
- Pay Down Your Balances to Decrease Your Credit Utilization
The two factors that have the most significant effect on your credit score are your payment history and your credit utilization. It takes time to boost your score by improving your payment history, but credit utilization is something you can improve much more quickly.
Your credit utilization is simply the amount of your available credit that you’re using across all the credit accounts you have. For example, let’s say you have four credit cards, and their combined credit limits add up to $20,000. That’s your available credit. Your balances total $8,000. That’s your credit utilization, and you’d be at 40 percent.
The lower your credit utilization is, the better. It’s recommended to keep it under 30 percent at all times, but keeping it under 20 percent is even better. Keep in mind that the credit reporting agencies can check your credit utilization at any time. If you’re halfway through a billing cycle and you put a large purchase on one of your cards, it’s better to pay it down right away to maintain a low credit utilization.
- Dispute Inaccuracies on Your Credit Report
Don’t make the mistake of assuming the credit reporting agencies always get it right. There can be mistakes on your credit report, and if you don’t handle them, they will bring down your credit score.
You should request at least one credit report per year from Equifax, Experian and TransUnion. You get one free from each of them by law. Review the information on each report for any mistakes. If you find anything wrong, contact both the creditor that reported the mistake and the credit reporting agency. Stay on top of it until the inaccuracy is removed.
You may also want to enroll in a credit monitoring service. Many banks provide this free of charge if you have an account with them. These services notify you if there are any changes on your credit report. Not only will you be aware of any mistakes right away, but this can also protect you from identity theft.
The best way to build and maintain a high credit score is to develop responsible financial habits, including paying all your bills on time and keeping your credit card balances low. When you need to improve your score and you don’t have much time to do it, the two methods above will bring you the best results.
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