When you take out any kind of loan, your credit score is important to lenders. If you have a score that’s defined as fair or poor (usually 650 or below), it could mean that lenders reject you outright or ask you to to pay a high interest rate. If you’re planning on buying a new home, applying for a car loan, or taking out a personal loan in the next six months, you may be wondering how to increase your credit score fast. Although there is no way to boost your score overnight, there are some steps you can take that help when you’re searching for ways to improve credit score fast.
How Can I Raise My Credit Score Fast?
Check Your Credit Report for Errors: The three major credit bureaus (TransUnion, Equifax, and Experian) use the information on your credit report to come up with your score. If there are errors, it could be dragging your score down. Fixing them can help raise credit score fast . According to the Federal Trade Commission, up to 25% of people have some small error on their report. Up to 5% of people have errors that are large enough to impact interest rates on loans.
Every twelve months, you can request a free copy of your report from each of the three bureaus. You can go to a site like annualcreditreport.com to get yours. When checking your report, make sure the balances listed for each of your accounts is correct. Also look at the reported late payments. If you find incorrect information, you can open a dispute with the credit bureau. Resolving any issues will be beneficial if you’re wondering how to improve your credit score fast.
Keep Balances Low: It may seem like a difficult thing to accomplish, but one of the best ways to increase your credit score is to pay off your debts. Your credit utilization ratio is the amount of debt you have compared to the amount of credit that’s available to you. This number plays a significant role in calculating your credit score, so try to keep your utilization under 30%. If you can get your utilization under 10%, lenders will look at you in a much more favorable light. Just making small payments each month is a good strategy if you’re searching for how to improve bad credit score.
Pay On Time: Payment history makes up 35% of your credit score, and paying on time is an important part of how to raise your credit score fast. Make sure you don’t have any accounts that are past due. Although delinquencies will remain on your report for seven years, paying on time will still be beneficial to your score. Many lenders will send you automated e-mails or texts when your due date is approaching. You can also enroll in automatic payments that will deduct your minimum payment from your account each month. Paying on time is an excellent strategy for how to improve bad credit.
Keep Accounts Open: Keeping your accounts open can help if you want to know how to increase credit score. Closing an account can lower the average age of your accounts, which may have a negative impact on your score. In addition, closing an account can lower the amount of credit that’s available to you, which affects your credit utilization ratio. However, opening too many new accounts in a short period of time can seem like risky behavior to a lender. If you’re searching for how to improve a bad credit score quickly, it’s probably best to maintain the same number of accounts you currently have.