Credit Sesame advises on how you can raise your credit score quickly.
Your credit score is an important part of your financial life. It determines whether you’re able to get approved for things like credit cards, car loans and mortgages, as well as what kind of interest rates you’ll pay.
There’s no secret way to increase your credit score overnight, but there are some ways you can hack your credit to see an improvement in a fairly short period of time. On average, it can take a month or two to see a difference in your score but only if you’re working at it make it happen. Take a look at the best ways to add points to your score.
1. Pay your bills on time
Paying bills late is one of the most common mistakes people make when it comes to their credit. Your payment history accounts for 35% of your credit score and even one late payment can send it into a nosedive. Doing something as simple as jotting your due dates down on a calendar can help you stay on top of your bills so nothing falls through the cracks.
2. Clean up credit mistakes
Errors on your credit report are more common than you think. According to the Federal Trade Commission, 1 in 5 Americans has at least one inaccuracy on their credit report. Getting these errors corrected can be time-consuming but it’s worth it when you’re trying to help your credit score.
You can get a free copy of your credit report from Equifax, Experian and TransUnion through AnnualCreditReport.com. Once you’ve got your reports, you’ll need to dig through them carefully to look for mistakes or inaccurate information.
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If you find any errors, the next step is disputing them through the reporting credit bureau so that the error can be corrected or removed. Once your credit report is updated, that should be reflected positively in how your score is calculated.
3. Become an authorized user
If you have a friend or a family member that has stellar credit, asking them to add you to one of their credit card accounts as an authorized user can go a long way towards improving your score. This is a great way to boost your credit fast if you have no credit or to push your score into the fair or good range in less time.
When you become an authorized user, the primary cardholder’s credit history for that account gets transplanted onto your credit report. As long as they’ve always paid on time and they keep their balances low, your score should reflect their good behavior. On the other hand, if they’re careless about making payments on time or they’re carrying a big balance that can work against so choose the person you plan to approach carefully.
4. Get a credit card if you don’t have one
Building credit is something of a catch-22 because you need credit to do it. If you have a thin credit file because you’ve never had any debt in your name, getting a credit card or two may be your best bet for increasing your credit score quickly. Just be careful, though, since you can end up in over your head with debt which can drop your credit score lower.
If you’re not able to qualify for an unsecured card right at the start, a secured credit card can be a good substitute while you’re establishing your credit history. With this kind of card, you put up a cash deposit that doubles as your credit line. Take care to shop around when you’re looking at secured cards since they tend to carry higher interest rates and fees than unsecured cards.
5. Increase your credit limit
One of the things lenders consider when checking your creditworthiness is your credit utilization ratio. This is the amount of debt you owe versus your total credit limit. If you’re using more than 30% of your available credit, that’s likely to drag your score down and cause lenders to you view you as a higher risk.
Paying down your debts is the most effective way to improve your credit utilization ratio (the balance you carry every month compared to your credit limit) but asking for a credit line increase can also help. Depending on the creditor, you may be able to request an increase online or over the phone. The creditor may run a hard check of your credit, which will show up as an inquiry on your credit report and subtract a few points in the process.
Simply spending a large portion of your credit limit is not the best way to build your credit score fast, in fact it’s the opposite of what you want to do. Just keep in mind that requesting a credit limit increase can be dangerous if you’re not disciplined about spending. If you charge up a high balance on one of your credit cards and the creditor decides to reduce your limit, it can cause your score to go down.
6. Negotiate with your creditors
Sometimes life throws you a curveball and it’s not possible to pay your debts on time. If you have a debt listed on your credit report that’s marked late or unpaid, you may be able to call up your lender and negotiate an agreement with your lender to have it removed. Typically, this will only work if it’s your first time paying late and you get caught up on the payment right away. Still, it’s worth a shot if you’ve always been a customer and you’re worried about preserving your credit score.
How long does it take to improve your credit score?
There’s no simple answer to the question of how long it takes to raise your credit score. On average, you’ll have to wait at least a month to see any difference but it can take longer depending on where your score was when you started and whether you’re rebounding from any serious credit mistakes.
For example, if you have a 780 credit score, missing a single payment can bring it down to 680. If your score was already at 680 and you have a late payment, you’d only see a 70-point drop versus 100. The higher your score, the more damage negative items on your credit report cause.
Derogatory items can remain on your credit report for 7 years and up to 10 years in the case of bankruptcy. Typically, it takes anywhere from 2 to 4 years to see your score make a complete recovery after a black mark has shown up on your credit.
Bottom line, it really depends on how much effort you put into your goal and where you are currently in terms of the credit range. You might run into situations where what you are paying off doesn’t even get reported, so it doesn’t even impact your goal – while other times what you are doing has minimum effect because you aren’t doing enough of it.
Hopefully you learned a few things on how to boost your credit score you’re ready to put an action plan in place. Credit scores can take time to build up but it is worth it in the long run when you have to take on large loans to buy a house or a car since you will get much better deals from creditors – just make sure to pay your monthly bills on time, every time.
Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.