May 18, 2021
Struggling with a low credit score? Here are the top seven ways to start increasing your credit score today.
Everyone knows that a higher credit score helps improve your chance of being approved for lower-interest mortgages, car loans, and credit cards. But in today’s world, a low credit score presents other problems as well. For example, did you know that a weak credit score can interfere with your ability to find a job? Or rent an apartment? That’s because employers and landlords usually check applicants’ credit scores.
If your credit score needs a boost, take heart. There are several actions you can take to start raising your credit score right away. Businesses typically update the three credit bureaus (Equifax, Experian, and TransUnion) once a month. If you begin today, you’ll likely see a positive difference in your credit score within the next 30 to 60 days.
Just remember: Although it’s possible to gain a modest increase in your credit score, genuine credit-building is a process that takes years. You’ll need to manage your credit wisely over the long term for any short-term increases to have a lasting effect.
Here are the top seven ways (plus a bonus tip!) to help raise your credit score within the next 30 days:
The experts agree: No strategy can help increase your credit score more than simply paying your bills on time. In fact, no other credit-enhancing strategy will have any effect if you pay your bills late. That’s because your payment history is the single most important element of your credit score. And late payments can remain in your credit records for over seven years.
Make sure your creditors receive your payments on or before the due date shown on your statement or invoice. Even if your creditor offers a “grace period” before late fees kick in, if they receive your payment after the due date, they’ll mark it late and report it to the credit bureaus.
If you have a payment over 30 days late, call that creditor immediately to explain your situation and discuss your payment options. If you can arrange to pay the bill in full, ask the creditor to consider not reporting it to the credit bureaus. Even if your creditor decides to report the incident, don’t let that stop you from trying to get your account current as soon as you can. Every month you’re delinquent does more harm to your credit score. Thankfully, the impact of late or missed payments lessens as time goes by. So the better you are at paying bills on time, the more quickly you’ll improve your credit score.
Generally speaking, the more money you owe, the less likely businesses will be to extend your credit. The more debt you pay off, the less risky you are to creditors, and the more your credit score should improve. The only truly effective way to deal with this challenge is to pay down the amount you owe. You can do that in a few ways:
If you can increase your credit limit on your accounts without increasing your balance due, you’ll instantly lower your overall credit utilization—which will give your credit score an immediate uptick. Call your credit card companies and ask them for a higher limit, just make sure it is not a “hard” credit inquiry that could actually lower your score). Especially if your income has increased or if you have a few years of solid credit history, they may be willing to raise your credit limits.
Getting wrong information removed from your credit report a surefire way to see a quick increase in your credit score. You can get information removed only if it’s incorrect or fraudulent. Carefully check your credit reports for fraud, errors, or evidence of identity theft. You can get free copies of your reports every year from the consumer reporting agencies by visiting annualcreditreport.com or by calling (toll-free) 877-322-8228.
If you find anything incorrect or suspicious in any of your reports, contact the appropriate bureau and file a dispute. They have 30 days to investigate your claims and respond, but as soon as they remove incorrect info, you should see an increase in your credit score. Additional tip: All three credit bureaus offer online tools that can help you monitor your credit, including email and text alerts that can alert you to any important changes in your information. Look for links to those tools on the bureau websites.
Do you have a close friend or relative with a solid, long-term credit history and a high credit limit? You may want to consider asking that person to add you to one of their accounts as an “authorized user.” They do not have to provide you with a card (or even give you the account number) for your credit score to increase. How does it work? Being an authorized user on a good-quality account further reduces your credit utilization, which decreases your riskiness and gives you the appearance of having a longer history of good credit. Note: This tactic might take more than a month to boost your score, but it should help within 60 to 90 days.
On the other hand, if you are (or were) an authorized user on a credit account that’s no longer current, that can be dragging your score downward. File a dispute and ask the appropriate credit bureau to remove that account from your credit report. As an authorized user, you are not responsible for paying any of the bills—which means the credit bureau has no good reason to deny your request.
What if your credit report is solid—except for one or two late payments? Try calling the credit bureau and admitting that you dropped the ball. Assure them that you’re on track going forward, and ask them to forgive your mistake and strike it from their records. As an alternative, you can give your request added impact by writing a “goodwill letter” that you can send by mail or email. Your request may be denied, but if it’s granted, you’ll see an immediate rise in your credit score.
It may sound illogical, but closing the accounts of credit cards that you’ve paid off or no longer use can actually reduce your credit score. That’s because when you close an account, you lose the ability for credit bureaus to factor that account’s credit limit into their calculations of your credit utilization. Best advice: Keep the account active. Use the card occasionally, just enough so the card company won’t close your account.
Experian Boost is a free program that enables you to link your utility and telecom accounts to your Experian credit report. By linking monthly bills that you normally pay on time (such as water, electricity, cell service, and even Netflix), you may be able to get an instant boost in your credit score. And if you should miss one of those payments, it won’t ding your credit, because only positive payment history is reported under the Boost program. Note: Experian Boost is based on a credit model called “FICO Score 8.” Nearly 90% of lenders use FICO scores to make credit decisions, but some lenders may use a different model (or even a score other than FICO). As a result, Experian Boost may not work for everyone—but it’s worth a shot.
What if you need help? If you simply cannot pay all of your bills on time, you may need help and advice. Just make sure you never pay anyone to “repair” your credit. Companies that make big promises and charge fees are usually scams. Instead, you can get free credit counseling from HUD (the U.S. Department of Housing and Urban Development). HUD sponsors credit-counseling agencies from coast to coast, and their no-fee counselors are uniquely trained to help you get on-track financially. You have several options: