How to Improve Your Credit Score By 100 Points or More
If you have recently checked your credit score, you may not see the number you would like. And while your score is not the only factor when considering your financial health, it is something that can affect other areas of your life. That’s why you need to do what you can to increase your credit score to a good or excellent number.
Your credit score can have an impact on several different things. If you take out a loan, a lower credit score may result in paying a higher interest rate. You may be turned down for insurance if your number is too low, and can also get premium rates if it is high. Some jobs also require a good credit score, making you ineligible to be hired.
So yes. Your credit score matters.
Fortunately, you aren’t stuck in this rut forever. There are some easy things you can to increase your credit score quickly. Below you will find some easy tips that can help you improve your score by 100 points and more — all in a short period of time!
IMPROVING YOUR CREDIT SCORE
KNOW YOUR SCORE
The first thing you need to do before you can raise your score is to know it. There is no way you can make a change if you don’t know where you are starting.
The simplest and FREE way to check your score is through Credit Sesame. It is truly a FREE way to get your credit score! I highly recommend that you use this company (over all others) when it comes to learning your score.
One thing to note is that checking your score through Credit Sesame will not have a negative impact on your score. The reason is that they pull the score for personal reasons and do not share it with lenders, which means it is a “soft inquiry.” Your score will have absolutely no impact by checking it.
Sign up for a FREE Credit Sesame account right now.
CHECK YOUR CREDIT REPORT
In addition to knowing your score, you should check your credit report for accuracy. The simple, and free way to check your score, is to request it from Annual Credit Report. You will receive your reports from all three agencies so you can make one request to get them all.
The next thing you need to do is review every item. According to the Federal Trade Commission, nearly 5% of all consumers have errors on their report. Check for debts that are not yours, negative payment histories and other information that is inaccurate. If you find items that are not correct, file a dispute to get them resolved.
Also, look for any past-due or outstanding debts. Reach out to these lenders to get them resolved and paid as needed. While it may take time for the adverse reporting to fall off your report, the sooner you can fix it, the better.
GET CAUGHT UP ON YOUR BILLS
One of the most significant factors in calculating your credit score is your credit history. Your history is how you pay your bills whether on time or late. All of those late payments and past-due amounts will have a negative impact. Paying your bills on time will help you bump your score quickly.
If you are behind on your bills, call the lender. Make arrangements to get caught up and start making payments on time. Paying 30 days late will result in a negative report. However, 60 days late will hurt much more.
If you have missed payments, the result will remain on your credit report for seven years. While you can’t get those removed, you can show you are now paying on time. Paying more bills on time will start to reflect more positively on your report and eventually outweigh the negative.
While doing this will not result in an immediate uptick in your credit score, it is essential to your overall credit health. Timely payments are crucial to having a higher score.
DON’T CHARGE TOO MUCH
While you need to use credit to build credit, you need to do so carefully. You need to watch your credit utilization, which is how much of your credit limit you have used. A good rule of thumb is to never charge more than 30% of any available credit limit on a card.
In a perfect world, you would pay off every card and call it a day. But, things are not perfect. Instead, you will need to try some strategies to reduce your utilization ratio.
First, call the lender and ask for a credit limit increase. Although the limit goes up, your balance remains the same. That immediately reduces your utilization ratio. Just make sure you ask if you can get one without a hard inquiry, as that can lower your score.
The next thing to do is to try to lower the balances on the cards with the highs utilization rates first. Get them paid down so the balance is at the 30% threshold, or lower. You may want to use your savings or your tax return towards the balance. You may also want to try a new side hustle so that you can bring in more money each month.
You may also want to consider taking out a personal loan or consolidating your debt. You may find that you will not only improve your credit utilization rate but may even get a lower interest rate, which in turn saves you money.
Since lenders report monthly, a change in the amount you owe vs. your available credit can be a quick way to improve your score.
USE CREDIT – WISELY
Your credit score is a comprised of your payment history in addition to your utilization. It is a measure of how you handle debt.
The fastest way to increase your score is to get a credit card and use, but wisely. For example, if the credit limit on your card is $1,000, never charge more than $295. Then, pay it off timely and in full every month.
A simple way to do this is to do what our family does. We set up as many bills as we can for automatic payments, which are attached to our one credit card (yes, we have just one). Then, we pay it in full each month. While we already had a high score, we continue to see it increase every month, just from paying our bills.
REMEMBER IT WILL NOT HAPPEN OVERNIGHT
Your credit score did not drop overnight, so you can’t expect it to increase instantly either. However, by being smart with your use of credit and applying these ideas above, you should see it start to improve rather quickly.
While some people will see an increase of 100 points or more, the needle might be more slow-moving for others. The worse your score is when you begin, the faster the results.
While you may want to increase your score, what matters more is your overall financial health.
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