Your credit score is a three-digit number that summarizes your credit history and behavior. It ranges from 300 to 850, with higher scores indicating better creditworthiness. Your credit score can affect your ability to qualify for loans, credit cards, mortgages and other financial products, as well as the interest rates and fees you pay.
Improving your credit score can help you save money and access better financial opportunities and believe it or not, it will also open the door to better job opportunities. But how can you do it fast? Here are some tips based on expert advice from various sources.
1. Review your credit reports
Your credit reports are the records of your credit activity that are used to calculate your score. They may contain errors or inaccuracies that can lower 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 review your credit reports, you can:
- Visit www.annualcreditreport.com and request your reports online
- Check 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
2. Pay your bills on time
Your payment history is the most important factor in your credit score, accounting for 35% of your score. Paying your bills on time every month shows lenders that you are responsible and reliable.
To pay your bills on time, 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
3. 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 keep your credit utilization low, 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
4. Become an authorized user
Becoming an authorized user on someone else’s card can boost your score without using the credit. You can benefit from their payment history and credit utilization, as long as they have good credit habits.
To become an authorized user, you can:
- Ask someone you trust, such as a family member or a friend, to add you to their account
- Make sure the card issuer reports authorized user activity to the credit bureaus
- Use the card responsibly and pay back any charges you make
5. Add to your credit mix
Your credit mix is the variety of credit types that you have, such as revolving (credit cards) and installment (loans). It accounts for 10% of your score. A diverse credit mix can show lenders that you have experience managing different types of credit.
To add to your credit mix, you can:
- Apply for a new type of credit, such as a personal loan, an auto loan or a student loan, but only if you need them and can afford them
- Use different types of credit responsibly and make timely payments
- 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
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.