How to Raise Your Credit Score

How to raise your credit score
Key Takeaways:
  • The most common reasons for low credit scores include no credit history, bad repayment history, and high balances.
  • You can raise your credit score by paying down balances or increasing available credit, rebuilding credit with secured or second chance loans, and becoming an authorized user on others’ accounts.
  • It probably takes less time than you think to raise your credit score.

Of course, you want to know how to raise your credit score. Your credit score impacts the cost of everything you finance. And unless you can pay cash, it determines if you can buy a house or a car. Insurance companies, employers, and landlords may also use credit scores to decide if they want to insure you, hire you, or rent to you.

With so much at stake, you should do whatever you can to raise your credit score. This article explains how to raise your credit score quickly and earn better credit terms.

Here are the article topics:

  • Why is your credit score low?

  • Checking your credit report

  • Make a plan to fix your credit

  • How to raise your credit score quickly

  • How long does it take to raise your credit score

  • How to raise your credit score by 100 points

  • How to raise your credit score: FAQs

Why Is Your Credit Score Low?

The first step to solving any problem is figuring out exactly what’s wrong.

If you have a low credit score, several things could be dragging it down. Often, a combination of problems causes a low credit score. 

Understanding what goes into your credit score can help you improve it. 

The most commonly used credit score is the FICO score. FICO is based on five factors, ranked here in order of importance:

  1. Payment history. This is your record of how you’ve used credit in the past. A track record of consistently on-time payments will help your credit score. A history of late payments and bad debts will hurt it.

  2. Amounts owed. This includes both the dollar amounts and the percentage of your available credit you are currently using. If you use more than 30% of your credit accounts, it’s likely to hurt your score. 

  3. Length of credit history. The longer you’ve been using credit, the more information there is for lenders to go on. The age of your oldest account matters, but so does the average age of your accounts and the age of your newest account.

  4. Mix of credit accounts. There are two major types of credit accounts. One is revolving credit, like credit cards. The other is installment loans, like mortgages and car loans. Having a history of successfully using both revolving and non-revolving credit is considered ideal. 

  5. New credit. If you’ve opened many new credit accounts recently, it may be considered a warning sign. Even applying for too many accounts at once can have a negative impact. 

Knowing how these five factors affect credit scores can help you identify the problem when you look at your credit history. 

Check Your Credit Report

Three major credit reporting agencies (CRAs) compile credit reports: Equifax, Experian, and TransUnion. Federal law entitles you to one free credit report per year from each organization. You can order your report at www.annualcreditreport.com.

When you get your credit report, you won’t see your credit score or the calculation of that score. What you will see, though, is the history on which that credit score is based. That history could give you clues on how to raise your credit score. 

Get a Free Credit Score

It used to be difficult to get a free credit score. Today, both FICO and VantageScores are widely available from these and other sources:

  • Experian (FICO score), if you sign up for a free account

  • Equifax (FICO score), by signing up for a free account

  • Credit unions and banks (many offer free credit scores to their customers)

  • Many major credit card companies, including American Express, Bank of America, Citibank, Commerce Bank, and Discover

  • Personal finance sites like Credit Karma and Credit Sesame (VantageScore)

Understand that when you sign up for a free credit score, the company providing it may (will?) use your data for marketing purposes. 

Improve Your Credit 

When you review your credit report, look for trouble areas and plan to deal with them.

Here are some examples of possible problems and how to correct them:

  • Poor payment history. If you’ve had some late payments in the past, the best solution is to steadily use credit and be sure to make your payments on time. This way, a good payment record will gradually replace the bad one. 

  • Too much credit in use (credit utilization ratio). If you are using more than 30% of your available credit, it’s a problem. The ideal way to address this is to pay down debt balances. Getting below 30% credit utilization should help; below 10% would be outstanding. 

  • Credit accounts are too new. Long-standing credit accounts look the best on your record. Only time will lengthen the age of those accounts, but you can help by being very selective about opening new accounts. Brand new accounts stand out on your credit record and also bring the average age of your accounts down, so pick your spots. 

  • Uneven balance of credit accounts. It’s best to have both revolving and installment credit accounts. If you only have one or the other, try opening an account of the other kind to balance it out. Find a payment amount you can easily afford so you can establish a record of steadily making on-time payments.

  • Too much additional credit. You need to pick your spots in opening new credit because adding too much credit at once can harm your score. It suggests you might be in danger of getting overextended. Applying for many accounts at once generates credit inquiries, and each one drops your score.

Determine which of these problems you have, and make a step-by-step plan to address them.

How to Raise Your Credit Score Quickly

One reason for making a plan is so you can prioritize steps that will have the fastest impact on your credit.

Here are some steps to raise your credit score fast:

  • Clear up errors on your credit report. If you’re pressed for time because of a mortgage application, your mortgage lender can order a rapid rescore. The service clears your errors in a few days and re-scores your credit.

  • Resolve any payment disputes with creditors or debt collectors.

  • Drop your credit utilization ratio. The fastest way to do this is debt consolidation with a personal loan or home equity loan. Another way to do it fast is to request credit line increases WITHOUT USING the new credit. Note that these solutions only work if you stop spending. Never consolidate if you’ll run your balances back up. 

  • Add good credit to your report almost instantly by becoming an authorized user on a friend or family member’s account. You don’t use their credit, but their repayment history will transfer to your credit report and improve your credit score. Make sure you only ask someone with excellent credit. 

  • If you’ve been cut off from regular credit cards, apply for a secured card that reports to all three CRAs. Make small charges and pay them off each month on time. You want to establish a successful payment history.

How Long Does it Take to Raise Your Credit Score?

You can make significant gains in weeks if your problem is inaccurate information, using too much credit, or not enough credit history. If your problem is bad credit history, expect it to take a little longer -- about six to 12 months.

Missed payments, debt write-offs or bankruptcies are serious problems that can take years to remove from your credit history. It won’t happen overnight, but you must start paying on time now. Put your accounts on an automatic or online bill-paying system to stop missing payments.

Steadily replacing a lousy history with a good one could show incremental improvements within six months. Derogatory credit gets less weight the older it becomes.  

How to Raise Your Credit Score by 100 Points

Lenders tend to divide borrowers into categories by credit score. From best to worst, these categories are:

  • Exceptional

  • Very good

  • Good

  • Fair

  • Poor

Although the standard FICO score is on a scale of 300 to 850, raising your credit score by even 20 points could be enough to move you up by one risk category. And of course, a 100-point increase can make a substantial difference in the type of credit you can get and what you pay for it. 

By following the tips in this article, you may be able to raise your credit score by 100 points in a few weeks. But it will take longer if your problem is bad credit history or severe derogatory issues. 

What about services that claim to “erase bad credit history” or “wipe out” missed payments? First, those services are costly, they cannot guarantee results, and in some cases, they employ illegal tactics like applying for a new taxpayer identification number. 

Most of them don’t do anything you can’t do yourself. A common tactic is to dispute everything negative on your credit report and hope the creditors don’t respond. It doesn’t usually work. 

If you have a good history with a creditor and have a single late payment, you can request that they remove the item as a gesture of goodwill. It’s easy. Write a letter explaining why you paid late, apologize, tell them it won’t happen again and ask them to forgive the late payment.

Similarly, you may be able to remove a collection with a pay-for-delete letter. If your collection is medical, paying it will remove it from your credit report. But if it isn’t, you may be able to get it removed if you pay it off. Send a letter asking the agency to remove the entry once you pay whatever amount you want to offer, and don’t send any money until you have a written agreement to delete the entry. 

Frequently Asked Questions

Can credit repair services remove bad payment history from my credit report?

Only if you can document an error and clear it up with the credit reporting bureaus. (You can do this yourself for free.) Be very skeptical of any credit repair service claiming it can magically make negative credit history disappear.

I might have too many credit cards. Would closing some of these accounts help my credit score?

While winnowing down your number of credit cards might help in the long run by making your credit usage easier to manage, be very careful of closing accounts when you’re trying to improve your credit score. Closing accounts could reduce the average age of your accounts and increase our credit utilization ratio. 

Either of those outcomes could have a negative impact on your credit score. Often, it’s better to simply stop using certain accounts without closing them right away. Once your balances are paid off, feel free to close the newest cards or those that charge fees.

If I swear off using credit for six months, will that raise my credit score?

Cutting down on borrowing is often a key to long-term improvements in your credit score. If you’re trying to pay down balances, it’s important to stop adding to them. However, credit scores are based on using credit. Once your cards are paid off, you can use them if you pay the balances off each month.