Once you’re out of school and your SAT score no longer means anything, your credit score becomes the most important number in your life. Your credit score tells financial institutions how big of a risk you are, which can have a profound impact on what loans you can qualify for and the interest rates you’ll pay. A poor credit score can follow you around for a long time and can even make it tough for you to get credit. Fortunately, there are ways that you can improve your credit score in a short period of time. If you want to give your credit score a quick boost, here are a few things you can do.
Pay Off Bills That are Past Due
Your payment history is a huge part of determining your credit score and having bills that are past due can cause your score to drop like a rock. Naturally, the best way to rectify this and get your score moving in the right direction is to pay off bills that are past due. If you’re behind on your bills, even a little, call your creditor and come up with a plan for you to get paid up to date. You should also ask them nicely to remove any report of delinquency payments from your credit report. They may not agree to this, but remind them that this hasn’t been a problem in the past and assure them it won’t be a problem in the future. Missed payments will stay on your credit report for seven years, so finding a way to get them off your credit report is huge for your credit score.
Setup Automatic Payment
One of the best ways to avoid late payments in the first place is to set up automatic payments on your accounts. Your lender can also send out reminders, but having an automatic payment is the best way to avoid any payment coming in late. Every time you make a payment on time and in full, you take a step toward improving your credit.
Look for Errors on Credit Report
Credit scores aren’t always perfectly accurate. In fact, it’s estimated that around 5% of people have errors on their credit report that have a negative impact on their score. It’s best to make sure you’re not one of those people. Once a year, you’re able to get a free report from one of the three major credit bureaus. If you haven’t done so lately, request a report and look for any mistakes. It’s possible for there to be old or inaccurate information on there. Maybe the account numbers listed aren’t yours or the balances are wrong. If you find a mistake, dispute it with the three credit bureaus so that you don’t have inaccurate information bringing your score down.
Remove Late Payments and Collection Accounts
Even if the negative aspects of your credit report are accurate, it doesn’t mean you can’t try to get them removed. As mentioned earlier, you can call your creditor and ask them to remove any mention of late payments from your report in a show of good faith. If they say no, you can dispute that the payments were late or negotiate a way to remove them from the report. Some lenders will agree to remove a late payment if you set up an automatic payment, which will help your credit score moving forward.
If you have a collection account, it can be a little more complicated to remove it. However, one thing to keep in mind is that you don’t just want to pay off a collection account if you get one. Doing that won’t take it off your credit report, so it could still hurt your score. Instead, negotiate a “pay for delete” in which you pay off the collection account in exchange for it being taken off your report. If you can remove derogatory items like late payments or collection accounts, your credit score will start improving overnight.
Stay Under Your Credit Limit
Even if you’re paying off your credit cards on time, it hurts your credit score if you’re pushing your credit limits to the max. If possible, make sure you’re utilizing no more than 30% of your limit. For example, if your credit cards have a combined limit of $10,000, don’t have more than $3,000 charged at one time. Doing this will improve your credit score by showing that you’re responsible financially without needing to utilize all of the credit available to you.
If you go over the 30% threshold with a big purchase, try paying it off right away as soon as it’s listed on your account online. You can also ask your creditor to raise your limit to help you stay under 30% of your limit. The caveat with that is you need to make sure they are willing to do so without a “hard” credit inquiry, which will cause your credit score to drop.
Pay Bills Twice Every Month
Sometimes, paying everything on time is only half the battle, especially if you’re trying to improve your credit score. If your monthly bills consistently have a high balance, it indicates that you’re overusing your credit, even if you’re able to pay everything in full every month. To avoid this, pay off at least half of your bill midway through the month so that bill at the end of the month isn’t so high. If you keep the balance on your bills at a reasonable level, it won’t look like you’re close to maxing out on your credit limit, which will help improve your credit score.
Reduce What You Owe
Roughly 30% of your credit score is determined by the debts you owe. Naturally, you can improve your score by reducing how much you owe. Obviously, making your monthly payments in full and on time will help. However, if you have a car, home, or student loan, it can help to pay more than the monthly minimum in order to decrease the principal balance on those loans. This will reduce how much debt you have to pay off and give your credit score more room to grow. Even if you have to make some sacrifices, paying down your debts is worthwhile if it helps you improve your credit score.
Piggy Back on Someone Else’s Good Credit
This method of improving your credit score will require a trusted family member or friend who’s in a good place financially. As long as this person agrees to this, they can list you as an authorized user on their account. You’ll receive a card with your name on it, although you probably won’t use it. However, your credit report will now list you as an authorized user on an account that’s in good standing. As a result, your credit score will improve because of your association with this account. If you know someone who’s willing to do this favor for you, this can be a great way to get your score moving in the right direction.
Keep Unused Credit Cards
If you have credit card accounts that you don’t use, keep them. As long as you’re not paying an annual fee, they’re not hurting you. On the contrary, having it increases your overall credit limit, so getting rid of this card will actually hurt your score. In fact, if you have an extra credit card that doesn’t get much use, start making small purchases with it that you’re able to pay back right away. Using multiple sources of credit, as long as you’re paying them off, will help your score. For some people, getting a new credit card and using it for a few small purchases can help get their score moving upward. However, opening multiple accounts in a short period of time can make you look desperate financially and harm your credit score rather than helping it. This is why it’s best to keep unused cards and perhaps even start to use them a little bit.