Your credit score is a number that reflects your creditworthiness, or how likely you are to repay your debts. It can affect your ability to get approved for loans, credit cards, mortgages and other financial products, as well as the interest rates and fees you pay.
A higher credit score can help you save money and achieve your financial goals. But how can you improve your credit score fast? Here are some tips based on expert advice from various sources1234.
Pay your loans on time
The most important factor in your credit score is your payment history, which accounts for 35% of your score. Paying your bills on time every month shows lenders that you are responsible and reliable.
To avoid missing payments, you can:
- Set up automatic payments or reminders for your due dates
- Pay at least the minimum amount required, but more if you can
- Contact your creditors if you have trouble making payments and ask for a hardship plan or a lower interest rate
Keep your credit utilization low
Your credit utilization is the percentage of your available credit that you are using. It accounts for 30% of your score. A high credit utilization can indicate that you are overextended and may have difficulty paying back your debts.
To lower your credit utilization, you can:
- Pay down your balances as much as possible
- Keep your balances below 30% of your credit limits, but ideally lower
- Pay off your cards several times a month to keep your balances low
- Ask for a higher credit limit, but only if you can avoid spending more
Have a long and diverse credit history
Your credit history is the length and variety of your credit accounts. It accounts for 15% of your score. A longer and more diverse credit history can show lenders that you have experience managing different types of credit.
To improve your credit history, you can:
- Keep your old accounts open, unless they have high fees or negative information
- Use different types of credit, such as revolving (credit cards) and installment (loans)
- Avoid opening too many new accounts in a short period of time, as this can lower your average account age and generate hard inquiries on your credit report
Check and dispute errors on your credit report
Your credit report is the record of your credit activity that is used to calculate your score. It may contain errors or inaccuracies that can hurt your score. You have the right to get a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax and TransUnion) every 12 months.
To check and dispute errors on your credit report, you can:
- Review your credit reports for any information that is incorrect, incomplete or fraudulent
- File a dispute with the credit bureau that issued the report and provide evidence to support your claim
- Follow up with the credit bureau and the creditor until the issue is resolved
Other tips to improve your credit score
There are some other ways to boost your credit score, depending on your situation. Some of them are:
- Get a secured credit card if you have no or limited credit history. A secured card requires a deposit that acts as your credit limit. You can use it like a regular card and build positive payment history.
- Become an authorized user on someone else’s card if you trust them and they have good credit habits. You can benefit from their payment history and credit utilization without being responsible for the debt.
- Get credit for rent and utility payments if they are not reported to the credit bureaus. You can use services like Experian Boost or RentReporters to add these payments to your credit report and increase your score.
- Add to your credit mix if you only have one type of credit. You can diversify by getting a personal loan, an auto loan or a student loan, but only if you need them and can afford them.
- Consolidate or settle your debt if you have high-interest or delinquent accounts. You can reduce your interest rate, lower your monthly payment and simplify your debt management.
Improving your credit score may take some time and effort, but it is worth it in the long run. By following these tips, you can increase your chances of getting better financial opportunities and achieving your goals.