Are you looking for ways to improve your credit score fast? Credit scores determine so many facets of our financial portfolio.
From qualifying for a car loan to deciding mortgage interest rates, every financial transaction requires knowing your credit score.
This is quite the incentive to keep your score in tip-top shape.
If your score isn’t where you need it to be to get a loan, you may want to think about some ways to improve your credit score fast.
Understanding Your Credit Score
It is of utmost importance to understand the factors that contribute to your credit score before trying to improve it.
There are five major contributors to a credit score:
- Payment History: Perhaps the most weighted factor of a credit score is your history of payments on all accounts both open and closed. Every time you make a late payment (usually 30 days after the due date) on an account, it damages your credit score. On the other hand, when you have consistent, timely payments on accounts, your credit score will reflect that dedication.
- Credit Utilization Ratio: An additional factor is called your credit utilization ratio. When you take your debt and compare it to your credit limits. If you have a credit card/s maxed out and your loans are still high, the credit score will reflect this. Lenders do not like to see potential borrowers in deep debt.
- Length of Credit History: If you have a long history of credit, you’re more likely to be considered for a loan. Although it is different across the various credit bureaus, this factor can count upwards of 30% of your credit score. If you have had a credit card or student loan for ten years, this will make your score higher than if you’ve only had loans for a couple of years.
- Credit Diversity: Diversity among your credit is also a plus. This refers to the types of loans. When you carry student loans, credit cards, and a mortgage your score will be higher. It demonstrates your ability to take control of all types of loans.
- Type of Inquiry: Be smart when applying for new loans. There are two types of credit inquiries that businesses can perform on you: soft credit check and hard inquiries. The hard inquiries are not good for your score. Also too many checks on your credit can negatively affect your score.
Now that you understand the combination to the credit score key, you can begin to find ways to improve your credit score fast.
5 Ways to Improve Your Credit Score Fast
Everyone knows that with good financing options, you can take better control of your finances and get out of debt faster.
In order to get those great offers, you need a good to excellent credit score, typically measured between 600 and 850.
If you’re wondering what the best ways to improve my credit score quickly are then look no further.
Take a look at these five sure-fire methods:
- The first thing to do for quick results is lower your credit utilization. This requires using less than 30% of the maximum on all loans. These loans include credit cards, home equity lines, and personal lines of credit. Remember that bureaus use the statement as their gauge so even if you pay off your balance every month, they won’t see that. Tips for keeping this percentage down is to split payments across multiple cards or accounts and only charge things that are payable through your budget, nothing extraneous.
- Requesting your credit card company to increase your limit will also help boost your score. This will automatically get you closer to that lower utilization percentage. Only do this if there is no hard credit pull associated with it and only on older credit cards, never new ones.
- Just like you clean out your closet, you should also clean up your credit report. The report may still contain accounts that you closed years before but are still showing up. If you had fraud, you can instruct the bureaus to mark the inquiries and credit approvals as such.
- In addition, if you had anything in collections that you paid off, it’ll take up to five years to come off your report. Because businesses don’t care about your report, oftentimes they will not bother to notify the bureaus that the account is settled in which case, you’ll want to follow up about those accounts. These resolutions can make your score go up in just days or even minutes in some cases.
- If you are added as an authorized user on a credit card or loan with someone who has good credit, you’ll increase your score automatically. This won’t take long and can bump your score in no time.
It is advised to use those older credit cards that you may have put in a drawer to never use again when you got that card with the better rate.
Perhaps if you need to keep your primary credit card below that 30% utilization rate, use the old card to make a purchase that you want.
Try not to close the old cards as that can damage your score.
These five best ways to improve your credit score quickly are the approaches that make the most positive impact to your score.
Do your homework on all your loans and check up on that credit report for inaccuracies and maybe you’ll see an increase in that number as early as tomorrow.
In Conclusion: Ways to Improve Your Credit Score Fast
Overall, a good tip is to try and keep your debt manageable in order to keep your credit score in good standing.
That debt-to-income ratio is extremely important in the eyes of some financiers.
If you have more debt showing up on your credit report than your income can manage, banks won’t want to lend you money.
Remember to always pay off high-interest debt first, not necessarily the biggest debt.
Always pay your monthly bills on time and be sure to keep that utilization rate under 30%.
You should see a big difference in that score quickly when you put these tips to practice.