Like losing weight, increasing your credit score and rebuilding your credit takes time. And, there is no quick way to fix a credit score. In fact, if you see any advertisements on ways to improve your credit score quickly, beware! Some methods used for this "quick fix" just may backfire on you. Our best advice for rebuilding credit if you are planning to buy a home in the near future is to start now. Doing so will help you to qualify for that lower interest loan, or just qualify period! Also, boosting your credit score from merely good to great will give you access to the best offers and best terms on nearly everything.
We've learned a few tricks to boost a credit score quickly. Here are our favorites.
1. Dispute errors…even the small ones - Your first step: Order a copy of all three credit reports from the major players – Equifax, TransUnion, and Experian. You can order one free copy per year from each credit bureau through
AnnualCreditReport.com. Order your reports, print a copy, and start reviewing, and disputing.
Look for the big errors first, things like accounts that don’t belong to you, paid balances that are showing as unpaid, and credit limits that are reported incorrectly. Highlight each one of these errors and then dispute them with the credit bureau. You can file a dispute online through each of the credit bureaus’ websites:
Remember you can dispute in writing OR online. For faster results do it online. For better results we suggest doing it in writing but it takes longer. After you disputed the big stuff, At this point, sweat the small things like credit inquires. If a creditor pulled my credit without my permission, you can disputed it later.
By law, the credit bureaus must investigate valid claims and remove inaccurate information, but if you run into trouble, complain to the Consumer Financial Protection Bureau.
2. Add missing accounts - Once you have cleaned up your credit history,started looking for ways to build it. You can do this by looking for credit lines that could have been included in your file, but weren’t. For example, you may have a cell phone in your name for 10 years, but those payments didn’t appear on your credit report. So simply make a list of every company you pay monthly, contacted the companies, and asked them to report your payment history to the credit bureaus. Below are the types of companies that are willing to report on your behalf:
Cable and Internet provider
Keep in mind, however, that no company is required to report your payments, on-time or not, and many utility companies won’t. Also keep in mind that this really is the icing on the cake so to speak. It will could make a difference if after doing the above you need that extra few points to qualify.
So when you approach companies like those above, you’re asking for a favor, not making a demand. To learn more about the pros and cons of utilities reporting to credit agencies, see this article "How to add utility bills to your credit report" from Digital Honey.
3. Pay down your highest balance - If you have balances on several credit cards, it’s tempting to pay off smaller balances first, thinking that will motivate you to attack the larger debts. But if you’re trying to boost your credit score quickly, you should start by paying off the credit card with the lowest available credit limit. For example, say you have two credit cards. One credit card has a $1,600 limit with a $400 balance, which means 25 percent of your available credit is being used. The second card has a $1,000 limit with an $800 balance, meaning 80 percent of your available credit is being utilized. In this case, the second credit card is doing worse damage to your score because of its higher utilization ratio. Pay it down about $150.00 first and your credit score will improve faster.
4. Pay by your report date, not your due date - Obviously, if you want good credit, you’ll pay your balance on or before their due date. But if you want to maintain a high credit score, it may be a good idea to pay some earlier – before balances are reported.
For example, say your credit card company reports your balance to credit reporting agencies every month on the 10th, but balance is due on the 20th. At the first of the month you charge $5,000, but pay the balance in full on the 20th. As far as you’re concerned, you’re not carrying a balance as you got your statement and paid it by the due date. But if someone checks their credit on the 15th, the credit reporting agency will report you have a $5,000 balance.
5. Blend your credit - Three years ago I applied for an auto loan and was denied because I didn’t have a good mix of credit types. Lenders like to see that you can manage different types of credit and handle multiple accounts at once, but I only had two major credit cards. So I applied for a small installment loan (one with fixed payments and an established due date) from my bank and paid it back over 12 months. Adding installment credit to my already established revolving (credit card) credit lines boosted my credit score by about 30 points.
6. Keep using your credit cards - Several years ago I heard a nugget of financial wisdom, “When you’re rebuilding your credit, tear up your credit cards.” Now, if you’re struggling to manage your spending habits, this is sound advice, but if you’re just trying to raise your credit score, cutting up credit cards can be more harmful than helpful. For example, I spent nearly a year trying to improve my credit score. During that time, I put a small amount on both of my credit cards each month and then made sure I paid the balance on time. While I was disputing errors and working on building up new credit, I was also adding 12 months of on-time payments to my existing credit score.
7. Ask for a credit line increase - The credit utilization ratio, mentioned briefly above, is something lenders use to see how you’re managing your available credit. For example, if you have a $15,000 available credit limit and a $400 balance, you’re utilizing little of your available credit, so you look strong. If you carry that same $400 balance on a card with a $500 credit limit, you’ve borrowed nearly as much as you can, making you appear more risky.
While paying off the balance is the best solution, I found a quick fix that improved my credit score while I was paying off debt. I simply called my credit card company and asked if they would increase my available credit limit. They agreed and raised my limit, which lowered my overall credit utilization ratio and gave me a 15 point boost.
8. Protect your credit (once you have it) - Once your credit score is in the prime range, do everything you can to protect it. When you have several late payments, collection accounts, and charge-offs, one mistake won’t hurt you too much, but when you have a near-perfect credit score, even one late payment will cause a big drop.
9. Hire a professional to improve your credit
If you have read this far and are still are not motivated to even start the process, simply hire a company to do it for you. While it's debatable as to how much of a result you will get from using such companies, there are many that are more than happy to give it a shot. I think its fair to say, your milage will vary. I personally have done it both ways with varying results.