Simple steps can steadily boost your credit score.
- Boosting your credit score by 100 points may determine the type of credit you qualify for.
- The first step is to comb through your existing credit reports for errors.
- Keeping your balances low and avoiding closing old accounts will also help your score.
There’s more than one type of credit score, but the most commonly used by lenders is FICO®. FICO® scores range from 300 to 850. The higher your score, the better it appears that you’ve managed credit in the past and the more likely you are to land a loan with a good interest rate when you need one. Credit scores impact a wide range of things, from whether you qualify for a low-interest credit card to whether you qualify for certain jobs.
While raising your score by 100 points may not seem like much, it can easily move you from one credit rating to another. Take a look at this table:
|Rating||FICO® Score Ranges|
Your credit rating is one of the factors that goes into how much interest you’ll pay on a loan. If simply bumping your score by 100 points can save you money, isn’t it worth doing?
The following steps can help you raise your score by 100 points or more in 2023.
1. Check your credit report
You’re entitled to one free copy from the “Big 3” credit reporting agencies once per week through 2023. You can order them all in one place through a site like annualcreditreport.com. Once you have them in hand, go over each report with a fine-tooth comb, looking for any errors. For example, if a creditor inaccurately reported that you were late making a payment, dispute it with the credit reporting agency in question (each report is likely to contain slightly different information).
The credit reporting agency has 45 days to either prove the negative remark is correct or to remove it from your report.
Ridding yourself of inaccurate negative remarks is one of the fastest ways to give your credit score a boost.
2. Get caught up, if necessary
If you’re late on any payments, focus on catching up. You can’t change what’s happened in the past, but you can take control of the future. Once you’re caught up, all those regular, on-time payments you make will cause your score to rise.
3. Pay off collections
If there are any collections on your report, get them paid off as quickly as possible. Creditors worry when they see a credit report that includes collections. In the meantime, continue to make payments on time each month.
4. Keep balances low
Debt-to-income (DTI) ratio refers to how much debt you carry in relation to how much credit you have available. The lower your debt load, the better. For example, if you have a credit card with a $10,000 limit, a $1,000 outstanding balance looks better than a $9,000 balance.
5. Don’t close accounts
It may be tempting to close accounts that feel like weights around your neck. Resist the urge. Closed accounts (even if you closed them yourself) mean you have less credit available to you. The less credit you have available, the higher your DTI will be.
6. Pay off debt instead of transferring it
The ability to transfer debt from one credit card to another makes it easy to hang onto debt instead of paying it off. Besides, each time you make a transfer, you’re hit with fees that add to your balance.
Instead of transferring debt, adopt a debt repayment plan that will allow you to systematically pay it off.
7. Apply for new credit sparingly
Creditors get nervous when they see that you’re regularly applying for new sources of credit. Only apply for credit when it’s truly needed. And if you’re shopping for a mortgage or auto loan, get all your loan shopping done within a two to four week period. Creditors understand that you’re going to shop around for the best loan when making a large purchase, so they count multiple inquiries in a short period of time as one single inquiry when the loan is intended for the same purpose.
8. Mix it up
Your FICO® Score benefits when you have a mix of different loan types. For example, you may want a mix of installment loans and credit cards. That way, it’s clear that you can manage all types of credit.
9. Ask a family member with good credit to add you to an account
If someone you’re close to has an excellent credit score, ask them to consider adding your name to one of their smaller accounts. For example, they may add your name to a credit card. While you’ll never actually use the card, each time the person makes a monthly payment, it gets reported to the credit bureaus under both of your names.
10. Consider Experian Boost
One way to raise your credit score quickly is by using Experian Boost. Boost allows you to get credit with the credit reporting agencies for payments that are not normally reported. This includes things like on-time phone, utility, and streaming services payments.
According to Experian, the average increase for those who’ve enrolled in the program so far has been 13 points.
While a lower-than-hoped-for credit score can be a pain, it’s not the end of the world — particularly because there are steps you can take to turn things around.
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