How to Improve Your Credit Score Fast in 30 Days
Planning to buy a home? Want to refinance an auto loan or mortgage? Looking to open a new credit card or seek financing for a major purchase?
Regardless of the situation, your lender will be checking your credit score to determine how trustworthy a consumer you are. Credit scores exist to help lenders, landlords and other professionals assess your creditworthiness and how much risk is involved in lending or renting to you. Just think of them as a snapshot of your financial responsibility. Credit scores are based on a variety of factors and take a significant amount of time to build.
Why Your Credit Score Matters More Than You Think
Nurturing your credit score is important, as higher scores are directly correlated to lower interest rates — and vice versa. For instance, someone with good credit might be approved for a new credit card with a 15% interest rate compared to a 25% interest rate for someone with poor credit. A 760 credit score may result in a 7.2% interest rate on a home mortgage, compared to a 7.6% interest rate for someone with a 680 score. The higher credit score may potentially translate to savings of hundreds of dollars per month.
Credit scores matter — and at TopLine, we prioritize them. We provide all members with access to free LSS Financial Counseling to help them understand and improve their credit scores.
Understanding the 5 Factors That Make Up Your Credit Score
There are five main factors that make up your FICO score:
- Payment history: Worth 35% of your score, paying your bills on time is the single most influential factor in your score's makeup.
- Credit utilization: Worth 30% of your score, this considers the amount of credit you're using versus the total limit you're approved for. Generally, you want to keep the utilization at or below 30%. The lower, the better.
- Length of credit history: Worth 15% of your score's makeup, the longer your credit history, the more favorably you're viewed.
- Credit mix: Worth 10% of your score, this looks at the different types of credit you have.
- New credit: Worth the final 10% of your score, this considers how often you're applying for new credit.
10 Strategies to Boost Your Credit Score (Starting Today)
Looking to boost your credit score? Here's a look at 10 strategies that you can begin enacting today to see improvements:
1. Pay Down Credit Card Balances Below 30% (Better Yet, Below 10%)
Your credit utilization is the amount of credit you're using versus the limit you're approved for. Ideally, you want these balances to be 30% or lower. For best results, however, strive to keep your balances below 10%. For example, if you have a credit card with a $10,000 limit, you'll want to keep your balance at any given time below $3,000. Reducing credit card debt across your revolving credit accounts is one of the fastest wins.
2. Make Every Payment On Time—No Exceptions
Pay at least the minimum amount due by the due date each month. Late payments account for 35% of your credit score, and one delinquent payment can substantially lower your score by anywhere from 60 to 110 points. Late payments matter less to your score over time, so committing to on-time payments and sticking with them makes a difference. Set up autopay, calendar reminders, or align due dates with pay periods to stay on track with your credit card company. Some lenders may also offer payment plans if you're struggling to keep up.
3. Check Your Credit Report for Errors (And Dispute Them)
Studies show that more than 30% of all credit reports may contain some sort of error, so it's good to get into the habit of regularly checking your report. You're privy to one free credit report annually from each of the three major credit bureaus, and we suggest you use it. If you find irregularities, file a dispute with the credit reporting agencies. From there, they'll take 30 days to investigate and then remove any errors, which can have an impact on your score.
4. Become an Authorized User on Someone Else's Account
You can earn a significant credit score boost within just a few months by becoming an authorized user on someone else's account. In doing so, you can benefit from the primary account holder's positive credit history and low utilization ratio without needing to use the account. Just be sure you're working with someone you can trust and who has a strong credit score.
5. Request a Credit Limit Increase (Without Increasing Spending)
While this may seem like an unusual tactic, it can be effective in improving your score, provided you remain disciplined. If your credit utilization is above 30%, consider requesting a limit increase. Doing so will increase your total limit and lower your utilization ratio, potentially to below 30%, which can improve your credit score. The best time to request a limit increase is after a consistent run of on-time payments or when your income has increased. Just be sure to avoid the temptation to spend up to your new limit.
6. Keep Old Credit Cards Open (Even If You Don't Use Them)
Keeping older credit cards open has a positive impact on your credit history and average account age, which are key factors that contribute to your FICO score. Just be sure not to use them a lot. To ensure they remain active, consider setting up a small recurring charge each month that can be easily paid off.
Only consider closing old credit cards if they have a significant annual fee, there's a security concern or you think you'll be tempted to regularly use them.
7. Consider a Credit-Builder Loan or Secured Credit Card
There are several ways to build your credit, including co-signed accounts for credit cards or loans, credit builder loans, secured credit cards, being an authorized user and making on-time rental payments.
8. Pay Bills Twice a Month Instead of Once
This is an advanced strategy that involves making a payment before your statement closing date so lenders report a lower overall balance to the credit reporting bureaus. Most lenders report your balance as of the statement closing date, not the payment due date, so your balance may be reported as lower than it actually is. You may also consider splitting monthly payments into two smaller payments, which can help demonstrate an improvement in credit utilization.
9. Limit New Credit Applications (Space Them Out)
Avoid applying for multiple accounts within a short period of time. Each time you apply for credit, a creditor will pull your credit report to see how much risk you pose as a borrower. Each look is referred to as a "hard inquiry," and it could dock your score by up to 7 points each pull. Too many hard inquiries can significantly negatively impact your good credit score, though this impact will fade over time. Hard inquiries remain on your credit report for a period of two years, but fade after 12 months. It's essential to note that rate shopping for certain loans (e.g., mortgages, auto loans) counts as one hard inquiry, provided it's done within a specified timeframe.
10. Use Tools Like Experian Boost to Add Positive Payment History
Tools like Experian Boost are free and can help improve your credit score by more than 10 points. Specifically, it helps improve your credit score by adding your phone, utility bills and streaming bills to your Experian score. However, it's essential to note that using Experian Boost only affects your score through Experian, not the other two credit bureaus.
How Fast Can You Really Improve Your Credit Score?
Improving your credit score isn't something that's done overnight — it takes time and commitment. While it is possible to make some marginal improvements within 30-45 days by disputing irregularities on your credit report and paying down balances to lower your credit utilization ratio, improving your credit score is a process.
If you stick to good habits, you'll likely notice more improvement within 3 to 6 months and even more long-term improvement over the course of a few years. But you have to start somewhere — and marginal improvements can be made fairly quickly.
What Credit Score Do You Need? Understanding the Ranges
While this is all subject to the financial institution you're working with, the FICO score is the most commonly used credit score by lenders when issuing loans and determining interest rates. Most scores range from 300-850. A score above 800 is exceptional; scores between 740 and 799 are very good. Scores between 670 and 739 are considered good. Generally speaking, the higher your credit score, the lower your interest rate and the more favorable loan terms you qualify for.
Common Credit Score Myths (Debunked)
It's important to separate fact from fiction when it comes to your credit score. Here's a look at some of the common myths that people confuse with the truth:
Checking my credit score will hurt it
This is only true when it's a "hard inquiry," which is often performed by a lender prior to approving a loan or line of credit. "Soft inquiries" do not impact your credit score.
I have to carry a balance to build credit
This isn't true, and we recommend paying in full each month by the due date to maintain a low credit utilization ratio.
Closing unused credit cards can help my score
This isn't always correct. Closing old, unused credit cards can lower your credit limit and potentially impact your credit utilization ratio. It may also shorten your credit history. Both are key factors that make up your credit score.
The more money I make, the better my credit score will be
Your consumer behavior, not your income, impacts your credit score.
How TopLine Credit Union Can Help You Build Better Credit
Being a TopLine member gives you and your family access to up to six free private and confidential financial education counseling sessions annually with a certified consumer credit counselor from LSS Financial Counseling. Sessions are available by phone, in-person or online. We also offer a free tool within our mobile banking platform, Credit Score, designed to help consumers simulate the potential impact of financial decisions on their credit score.
Contact LSS today for your free financial education session at 1-800-528-2926 or visit LSS online and mention you are a TopLine member.
Your Action Plan: Start Improving Your Credit Today
Are you ready to start improving your credit score? Start by reviewing your report and identifying any errors that you can dispute. From there, we suggest committing to on-time bill payment via autopay options, paying down high-interest debt and scheduling counseling with LSS if necessary. Building up your credit score is a long-term commitment, but every action can make a difference.
Contact TopLine today to learn more about our credit-building resources and products, and get started today.
FAQs
How fast can I improve my credit score?
By implementing the right credit-building strategies, you can start to see marginal improvements in as little as 30 to 45 days.
What's the fastest way to raise my credit score?
The fastest way to increase your credit score is to tackle your debt to reduce your credit utilization ratio below 30%. You may also want to review your report and dispute any discrepancies with the credit reporting bureaus.
Does checking my own credit score hurt it?
As long as it's a "soft inquiry," checking your credit score will have no negative impact. "Hard inquiries," conversely, are performed by lenders when you apply for new credit and can temporarily impact your credit score by a few points.
What credit score do I need to buy a house?
This varies based on the lender, but generally speaking, you should strive for a credit score of at least 620 for a conventional loan or VA loan. Consumers can qualify for FHA loans with as low as a 500 credit score.
Can I improve my credit score in 30 days?
Yes, it's not uncommon to see marginal improvements to your credit score within 30 days if you pay down or consolidate debt, successfully dispute any errors or commit to paying all bills on time. Lenders report monthly, so these small wins can be reflected quickly.
Will paying off collections improve my credit score?
Yes, the biggest benefit of paying off collections is that lenders will view these items as being "paid," which they tend to do more favorably, even if they remain on your credit report for an extended period.
How long do late payments stay on my credit report?
Late payments can stay on your credit report for up to seven years from the date the payment was first missed; however, their negative effect lessens over time.
Should I close old credit cards I don't use?
This is a tricky question, but generally the answer is "no." Closing out old credit cards can lower your total available credit limit, which can impact your credit utilization ratio. It can also shorten your credit history, another factor that plays into your credit score. However, you might consider closing them to avoid annual fees, if you have security concerns or if there's the temptation to spend with them.