People are always looking for ways to improve their credit scores. Many people only realize the importance of improving their credit when they are applying for a specific credit card, loan, or lease. There are plenty of credit improvement guides with great information that are more comprehensive. These tips are different and geared toward ways to improve your credit scores quickly. If you need to improve your credit score as soon as possible, here are some steps to take:
Lower Your Credit Utilization on Credit Cards
Your credit utilization is a measure of how much of your credit limit you’re using. The standard recommendation is not to use more than 30% of your available limit. That means if you have a $1,000 limit, it’s best to have a total of less than $300 in charges at any given time. You want to ensure your balance is low when the card issuer reports it to the credit bureaus. You can do so by paying down the balance before the billing cycle ends or by making a few more payments throughout the month.
Following this step and lowering your credit utilization will quickly improve your credit score. Your credit score will go up almost immediately after your credit card company reports the lower credit utilization to the credit bureaus.
Request A Credit Increase
As mentioned in the previous step, credit utilization has a significant impact on your credit scores. Asking your credit card issuer for a credit limit increase usually is easy. You want to ask the representative you speak with if you can get an increase without making a hard credit inquiry, as it can temporarily drop your credit score.
If approved for a credit limit increase, your credit scores should jump as soon as your credit card issuer reports the credit limit increase to the credit bureaus. Your credit scores will change quickly because the increase in your credit limit will cause your credit utilization to drop immediately.
Get Added as an Authorized User
Getting added as an authorized user to a credit card account with a high credit limit can help improve your credit scores. If your spouse, family member, or friend has a high-limit card and is willing to add you as an authorized user, you can quickly see a significant impact on your credit scores.
Again, this has to do with credit utilization. Getting added as an authorized user to a high-credit limit card will lower your credit utilization and help boost your credit scores quickly. You will notice an increase in your credit score as soon as the credit issuer reports your addition to the account to the credit bureaus.
Get a Secured Credit Card
Another way to build or rebuild your credit is with a secured credit card. A cash deposit backs this type of card; you pay it upfront, and the deposit amount is usually the same as your credit limit. You use it like a regular credit card, and your on-time payments help build your credit.
A secured credit card is the best way to build or rebuild credit if you do everything alone. You want to ensure that any secure card you decide to use reports to all three major credit bureaus. Building your credit using a secured card isn’t instant, and that is not the goal if you’re going this route. You want to show that you can consistently pay on time and keep the balances on the card low.
Get a Secured or Credit Builder Loan
A credit-builder or secured loan is best for starting over when you are trying to rebuild your credit after a bankruptcy or another financial crisis. These types of loans will improve your credit score, but your score will not climb as fast from paying a loan off as it will from increasing your credit utilization quickly. Still, a secured loan is a good idea if you can part from the money for the deposit and continually make the payments on-time.
As with a secured credit card, these loans are backed by a deposit. In this instance, secured loans are typically supported by a dedicated savings account. To pay off this loan, you will make your payments by depositing money into your savings account. Once the loan is paid off, you will receive your money back minus any fees.
Increase Your Credit Scores by Paying Your Rent and Utilities on Time
If you are paying rent, there is a chance that your rent payments are being reported to the credit bureaus. Not all credit scoring models consider rent payments a factor in your credit score. The VantageScores do include rent payments if they are being reported, but the FICO 8 doesn’t consider on-time rent payments as a factor.
Some companies offer services that instantly improve your credit scores by connecting to your bank account to see what bills you regularly pay. Experian Boost can improve your credit scores if you are paying for streaming services, phone and utility bills, cable and internet bills, and more.
How to Monitor My Score
After you have done what you can to improve your credit scores quickly, you need to continue to make payments on time and keep your credit utilization down. You will see your credit score continue to climb over time if you follow these practices. You will be able to watch your score increase and monitor threats to your credit with many different free and paid services. Credit Karma, Credit Sesame, Experian, and many services your bank or credit card company offer will monitor your credit score for free and alert you to possible threats.