How To Raise Your Credit Score Fast
If you want to know how to raise your credit score in a jiffy then you will find good tips in this article. Of course the best results come from being consistent over the long term. Those super-high credit scores you hear about are only obtained through years of keeping balances low, never missing a payment and using credit judiciously.
However, if you have a low score and an urgent need for financing, such as to get an apartment, a car loan, or even qualify for a home mortgage, you don’t need an amazing credit score. It only needs to be high enough to have your application approved. And for that, just a few steps can push your credit score high enough to accomplish your immediate goal.
Credit 101: Before Attempting To
Increase Your Scores
Before you do anything to modify or increase credit score factors, order your report from each of the Big Three credit bureaus. If you haven’t already ordered your free credit reports over the past 12 months, then you can obtain them at AnnualCreditReport.com.
You also want to see your credit score for each bureau, so you must pay an extra fee for your scores. Alternatively, some services provide you with your credit report and scores free. The score they provide for free usually isn’t FICO, which is what most lenders use to evaluate your creditworthiness.
Even if it is another scoring system, it looks at many of the same criteria and it can give you a good idea of how your various credit scores are performing based on the information currently reported about you to the bureaus. Quizzle’s free credit report service lets you have your VantageScore free too.
If you feel it’s important to know your FICO score then you can order it without paying for the reports. This saves you money because you can still get your free credit reports from Quizzle or another provider and for a fee you’ll receive your FICO credit score here. Much of what you can do to rapidly raise a credit score works no matter which particular scoring system it is.
Inspecting What’s In Your Credit Record
Once you have your credit report, take a close look at the information listed for your accounts and public records. There may be errors that are working against you, such as debts paid off, debts that aren’t yours, incorrect credit limits, and mistaken entries for payment dates. Removing and correcting these mistakes can automatically raise your credit scores quickly.
Even liens and judgments sometimes appear for the wrong person when a court clerk incorrectly enters personal information that is reported to the credit reporting agencies. Whether or not you decide to aggressively raise your credit score soon, you’ll want to discover these kinds of damaging items in your credit profile.
Liens and judgments are used by creditors to seize your cash and other assets. You wouldn’t want to find that your bank account has been cleared out because of a collection lien or that your car has been seized to pay a debt that was never yours.
Sometimes people don’t want to order their credit report because they believe it will lower their credit scores. Keep in mind that if you order your own report and credit score it doesn’t harm your score.
This is because it’s your own personal inquiry about your information rather than a request for consumer information made by a business or a bank. When you’ve seen what’s in your credit report, you’ll have a good idea about the next steps to increase your credit scores in a short timeframe.
Manage Collection Accounts to
Accelerate Credit Rescoring
If you see accounts that have been placed with a collection agency you can dispute any inaccurate information. To comply with the Fair Credit Reporting Act, creditors and collectors must remove any negative information that cannot be verified in these “collection accounts” within a reasonable timeframe.
You should become familiar with the FCRA and other consumer credit laws as you will be relying on them to raise your credit score as fast as possible and improve your public profile with the credit bureaus.
- Review your credit record
- Inspect collections accounts for inaccurate information and fraudulent accounts
- Dispute inaccurate information with the credit bureaus for items being reported about you negatively
- For accounts that remain with negative information note the contact information for companies listed
Write to these companies and explain that you require their cooperation with having the negative account removed from the credit bureau. If the federal and state credit laws apply, you can refer to them in your letter. This is called a “Deletion Letter” and it is common for people to send these to collection companies requesting updated reporting with no negative entries.
A collection agency or creditor will often delete the challenged negative item rather than risk a lawsuit or penalties for not complying with credit reporting laws. Others will reply to you that they have verified the negative item is yours, and it will remain on the account history unless a settlement is reached clearing the debt. This is often called “Pay For Delete” and it can work in your favor if you’re trying to accelerate the process to boost credit scores.
This can turn into a negotiation with the collection agent and an opportunity for you to offer a reduced amount in return for deleting the negative information from your record with the credit bureaus. Since all collection agencies are first and foremost a business and like all businesses they want to be paid for their services, many of them are agreeable to such an arrangement. Be sure to have such an agreement nailed down in writing before making any payments.
Also consider the statute of limitations on collection activities in your state. This knowledge will help you decide if it’s worth it to have the account deleted so you can have your credit score rise faster. Alternatives would be to wait until the statute of limitations has passed before negotiating a settlement amount, or even challenging the item again later for inaccurate information about your account.
Logically, a collection agent would be more open to your offer knowing that there is little chance of being paid on a debt that has passed its statute of limitations period for collection activities. As you can see, there are several factors to consider so your own circumstances will determine your decision about how to proceed.
How to Handle Accounts to Quickly Raise
Your Credit Scoring Factors
There are easy methods using credit cards (called “open ended” or “revolving” credit accounts) to make your credit score rise as fast as possible. These are simpler and more direct than writing letters to creditors and negotiating with collection agents.
First, review your card account balances and identify any that are higher than 25-30% of their credit limits. You’ll want to reduce their balances to lesser than 30% and ideally below 20% of their limits. Most experts agree that revolving accounts carrying balances consistently above 30% indicate a higher credit risk. It’s a kind of informal red flag for lenders and creditors to be cautious when issuing new credit.
Keeping your credit use – called “Utilization Rate” – below this is essential for having a decent credit score. This means that if you drop your balances down to 20% or less than the account’s utilization rate, then you can expect a quick increase in your credit score. Sometimes this occurs within the next billing cycle.
Second, another way of decreasing your utilization rate is to increase your combined credit limit. One way of doing this is to open more credit card accounts. Consider this example to understand the math behind how this works:
You have 3 cards each with $1000 credit limit. Adding these equals $3,000 total credit available to you. Each card has a $400 balance. The total balances for all three cards combined is $1,200 (3 x $400 = $1,200).
This means your total credit utilization rate is 40% ($1,200 divided by $3,000). That’s too high and will keep your score low.
Simply adding one more credit card account with a $1,000 limit will provide you with $4,000 total credit available. This brings your credit utilization rate down to 30% ($1,200 divided by $4,000).
This lower credit utilization rate will help your credit score rise.
If you’re ambitious about getting your credit score up as quickly as possible, then you could add more to your available credit by opening another revolving credit account (credit card). You can see that another $1,000 credit limit account will give you $5,000 available credit for the 5 cards, dropping your utilization rate to 24% ($1,200 divided by $5,000). When you grasp how this works and implement it, you have an effective method for rapidly increasing your credit score.
Third, following the logic of the rule about credit utilization, do not let any of your cards reach their credit limit. This may seem obvious, but it’s important to realize that maxing out a card to its credit limit sends a serious message of caution to creditors. The credit bureaus calculate this factor into your credit score. If any of your cards have hit their limits, pay them down first.
You may have cards with high balances and cannot afford to pay them down immediately and also don’t want to open more revolving credit accounts. Many credit experts suggest that shifting part of the balance over to other credit cards can help your score factors.
The thinking behind is that it appears more conservative to creditors. A borrower managing several cards that are each around 20% (or less) of their credit limits appears safer than a borrower with only 1 or 2 cards stuck with balances at the account’s credit limits.
More Credit Hacks That Can
Swiftly Lift Your Score
This method works if you know someone who has a good credit history and would be willing to add you to their account as an Authorized User. It’s often used by people who haven’t yet established any credit, such as college students. However, it works for anyone who needs to increase their scores in a short time.
Not all creditors allow an “AU” to have the account’s history inserted into their own credit record. If you find a lender or bank that allows this, then you could have a virtual credit history established overnight, with a favorable rise in your credit score.
Becoming an Authorized User on someone’s account can be a sensitive subject because it involves taking responsibility for someone else’s credit record. For this reason, it’s best to consider what you are trying to achieve with your credit goals before pursuing this approach.
Another credit hack that may be a little sneaky but sometimes works to help your score and your credit profile, involves reporting your card lost. Usually when you report your card as stolen or lost, the creditor closes your account and creates a new account (with a new account number) to replace it.
According to credit expert Barry Paperno, some creditors will insert your entire credit history into the new account. When it is reported to the credit bureaus, the new account appears in your profile with the date opened drawn directly from the original account, seasoned over time. Because credit aging is a significant scoring factor, this longer average age for your accounts can give your credit score a quick raise.
If you decide this is something you’d like to try, consider its ethical implications. This is why I’m not advising it, but it is instructive for realizing that there are many ways to improve your credit score, some of them more creative than others.
Points to Remember When Fixing Your Scores
- Check your credit record and scores often
- Challenge inaccurate negative information to have it removed
- Minimize applications for credit because they can lower your score
- Pay your card balances to get them below 20% for fastest scoring results
- Negotiate with creditors for a Deletion Letter to send to the credit bureaus
- Distribute balances evenly between accounts rather than carrying high balances on fewer cards
You should realize that most creditors place more importance on the most recent 24 months of consumer behavior and payment activity than what has happened earlier in your credit history.
Something else to keep in mind is that a long credit history is a positive score factor. Many people make the mistake of closing credit card accounts when they pay them off. If you are trying to raise your credit score soon, then wait to close accounts or don’t close them at all, just keep them to make occasional purchases such as for gas and groceries.
Not only is it good to show longevity in managing credit, it also helps keep your overall utilization rate low. That’s two important credit scoring factors that will make sure your credit scores rise fast and help you build a diverse and stable credit history. This is why it’s better for your credit score to hang onto credit card accounts rather than canceling them after their balances are paid off.
You can see articles to learn more about fixing your credit scores, FICO and VantageScore, checking your scores, and FAQs at the main credit scores page on this website.
Knowing how to raise your credit score fast using these methods will help you reach your credit goals while saving you time and money.
