When you apply for a loan or credit card, having a high credit score can help you qualify for better interest rates, higher credit limits, and other favorable terms. If you have a low credit score, you may want to know how to get it up fast. Although it is not possible to increase your credit score overnight, there are ways to increase it in a few months.
This is what we are going to explain:
- How to raise your credit score fast
- Become an authorized user
- Look for errors on your credit report
- Reduce your credit card balances
- Request a higher credit limit
- Report the payment of your rent and public services
- Apply for a loan made to establish credit
Important points
- Your credit score is based on the information in your credit reports. These reports are updated every 30 to 45 days.
- You could raise your credit score by becoming an authorized user, disputing errors on your credit report, reducing the use of your credit, reporting your rent and utility payments to the credit bureaus, or requesting a loan made to establish credit.
How to raise your credit score fast
Your credit score is calculated using information from your credit reports, which are usually updated once a month. It can take up to 45 days for your credit reports and credit scores to reflect positive changes in your credit activity.
In a nutshell:
- Credit history – Details of how you have used your credit in the past and present
- Credit report – A written or digital record containing that information
- Credit Score – A three-digit number that is based on that information
While it’s not possible to increase your credit score overnight, there are ways to give it a boost. Here are six very useful strategies.
1. Become an authorized user
An easy way to raise your credit score is to become an authorized user on someone else’s credit card account. Ideally, you should ask a family member or close friend with a high credit score to let you add your name to their account. Thus, as an authorized user, you will have annotated, in your own credit report, the payments that this person makes on time. This can quickly increase your credit score.
2. Look for errors on your credit report
Sometimes lenders or credit bureaus make mistakes. In fact, it’s estimated that about one-third of US consumers have errors on their credit reports. If this is your case, a mistake could lower your credit score.
You can review your credit reports by requesting free copies every 12 months at AnnualCreditReport.com. If you find incorrect information, you can take these steps to have it removed:
- Dispute the error with the credit bureau, either online or by mail
- Provide documentation that supports your claim
- Let the credit bureau do an investigation
Credit bureaus are required to resolve these claims within 30 days. If they find that your claim is correct, they will remove the error.
3. Reduce your credit card balances to 30% or less
You already know how important it is to pay your credit card bills on time every month. Even one late payment can lower your credit score. But did you know that carrying a large balance on a credit card can also be bad for your credit?
This is due to something called the credit utilization rate. This number compares how much credit you are currently using to your total credit limit. For example, if you have a credit limit of $1,000 and your credit card balance is $500, your credit utilization rate will be 50 percent.
Maintaining a credit utilization ratio of 30 percent or less will help to achieve a high credit score. Reducing your credit card balances can help you reach this goal.
4. Request a higher credit limit
Another way is to ask the credit card company to raise your credit limit. A higher credit limit will give you a lower credit utilization rate, even if your credit balances remain the same.
For example, let’s say the credit company agrees to increase your credit limit from $1,000 to $1,500. If you keep the same $500 balance, your credit usage rate on this card will drop from 50 percent to 33 percent.
5. Report the payment of your rent and public services
Your payment history is the most important factor in your credit score. Many lenders automatically report your payments to the credit bureaus, but landlords and utility companies (gas, light, etc.) generally do not. If you always make your rent and utility payments on time, adding them to your credit report can improve your credit score.
There are several easy ways to do this. You can ask your lessor or to the utility company that reports your payments directly to the credit bureaus. Or you can sign up for Experian Boost, a free service that connects your bank account with your Experian credit report. There are other companies that can report your rent and utility payments to the credit bureaus, but most charge for this service.
6. Apply for a credit-building loan
If you’ve only used credit cards so far, taking out a loan can help your credit score. This is because lenders like to see that you can handle different kinds of credit accounts.
With a credit-building loan, you give the lender a security deposit for the same amount as the loan. Qualifying for these loans is easier than qualifying for regular loans because you are borrowing your own money. Loans made to build credit have two advantages: The loan can broaden your credit mix by adding another type of account. And you can use the loan to establish a credit history of making regular, on-time payments. These two things can increase your credit score.
Oportun: Affordable loan options designed with you in mind
Now that you know how to raise your credit score, you’ll like to know how Oportun can help you if you’re looking for affordable credit options. Visit our website for more information on:
- Personal loans
- Secured Personal Loans
- Credit cards
- Savings
- Investments
- And much more!
Fuentes:
FICO. What’s in my FICO scores? What is included in my FICO scores?
TransUnion. How long does it take for a credit report to update? How long does it take to update a credit report?
CNBC. A third of Americans found errors on their credit reports. Here’s how to fix those mistakes One third of Americans found errors on their credit reports. This is what you need to do to correct those errors
Federal Trade Commission. Disputing errors on your credit reports How to dispute errors on your credit reports
Experian. What is a credit utilization rate? What is a credit utilization ratio?
Freddie Mac. How to get your rent reported to credit bureaus What to do to have your income reported to the credit bureaus
Experian. Experian Boost
Experian. Everything you need to know about credit-builder loans Everything you need to know about loans made to establish credit
The information on this site, including any third-party content and opinions, is for educational purposes only and should not be considered as legal, tax or financial advice, or to indicate the availability or appropriateness of any Oportun product or service for your particular circumstances. . Contact your independent financial adviser for advice on your personal situation.
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