10 Simple Ways To Boost Your Credit Score Right Now
Your credit score is more than just a number. It’s the key to getting a home loan, buying a car, and possibly even securing a job. It’s also not set in stone.
Credit scores are always changing depending on how you manage your money and use available credit. If your score isn’t great right now, there are a lot of things you can do to boost it higher and reap the financial rewards.
1. Check Your Credit Report
The only way to know how to improve your credit score is to know what’s in your report. You can check your report for free once a year with each of the three credit reporting bureaus. The majority of the information will be the same, but each report might be slightly different. You can choose to check one or two now to get an idea of where you stand, then use your free report at the other bureau(s) after implementing some of the suggestion below to see how much progress has been made.
2. Correct Errors on Your Credit Report
Mistakes happen—even on your credit report. Whether someone stole your identity, another person has the same name as you, or there was a glitch in the system, incorrect information could be hurting your credit score. Inadvertently, a creditor might have forgotten to update the information or made an error when reporting. If you find an error, contact each one of the credit reporting companies and explain the situation. The companies are obligated to investigate each error report. You may need to provide documentation or contact the creditor to let them know there’s an error that needs to be fixed.
3. Use Auto Draft Payments
One way to quickly ruin your credit score is by making late payments or missing them all together. Payment history accounts for 35% of your credit score. Auto draft payments only need to be set up once so you don’t have to remember to pay bills each month. Typically, a late payment is going to stay on your record for seven years, so the sooner you can eliminate that problem the better.
4. Pay Off Debt That’s Close to the Limit
Every line of credit is going to have a limit. If your credit cards and store cards are close to maxed out, this is going to reflect poorly on your credit report. Focus on paying down revolving credit lines that are close to the limit to help offset the impact. Ideally, you’ll want to get the balance down to 30% or less of the limit.
5. Pay Off the Small Balances
Another thing to focus on is completely paying off credit cards that have small balances. Reporting agencies will look at how many cards currently have any type of balance to determine a score. If you can completely eliminate a balance, it will help improve your score.
6. Open a New Line of Credit
Not having enough credit can also be a problem because the reporting companies don’t have much to go off of to determine a score. For people that only have one or two credit lines, it could be beneficial to open up another. This will give the companies more to look at, and it will increase your overall available credit limit. For example, if you have one credit card with a $5,000 limit, that’s your overall ceiling. If you add another credit card with a $3,000 limit, you now have a ceiling of $8,000, which makes your overall debt-to-credit look at little better.
7. But Don’t Apply for New Credit Repeatedly
When you apply for more credit, the company giving you the credit will inquire into your credit score. These “inquiries” will be noted by the credit reporting companies, and your score will be lowered temporarily. One or two inquiries every now and then shouldn’t make much of a difference, but numerous inquiries for revolving credit in a short period of time can be viewed negatively. However, there are a few exceptions. If you’re shopping around for a mortgage, student loan, or car loan, the scoring formula will account for the fact that you’ll just be getting one loan even if you submit multiple applications. Applications that are made within 30 days of receiving these types of loans are typically ignored.
8. Get Creditors to Increase Your Limit
Another quick way to decrease your debt-to-credit ratio and give your score a little bump is to get creditors to increase your limit. This will increase your credit without affecting your debt.
9. Become an Authorized User on Someone Else’s Credit Card
If you have a relative, significant other, or close friend with great credit, you can piggyback off of their good score by becoming an authorized user on one of their credit cards. Rules need to be very clear on whether you’ll be able to use the credit, but simply having your name attached to an account in good standing can improve your score.
10. Don’t Close an Account Because There’s a Blemish
Closing an account won’t erase the record from your credit report. In fact, it could end up hurting your score because it lowers your available credit limit and ends the history you’ve been building. The blemish will still be there lowering your score, but you’ll get none of the benefit of having had the account open.