Sometimes you just do not have a lot of time to improve credit scores. You may be in the market for a mortgage, personal or auto loan. You may even be job searching or simply seeking auto or home insurance.
Consumers may not realize credit scores are in a constant state of flux. A change may occur to your credit score every time a creditor reports information. Compound that by the number of creditors reporting to the credit bureaus at any given time and your credit score could change on a daily basis.
The constant change in credit scores may work to your advantage. Learn how to raise your credit score fast when you don’t have a lot of time to rebuild credit by getting positive information reporting and/or deleting negative information.
10 Ways to Raise Your Credit Score Fast
1. Decrease your credit card balance on the small accounts
Pay down your credit card and decrease your balance to thirty percent (10%) or less than your available credit limit. Your credit score will increase immediately. If you do not have the money to decrease the balance on the larger accounts, go for the smaller accounts. It does not matter whether the credit limit is $250 or $2500. Your credit scores will increase immediately by paying down your credit card balance.
2. Pay your Bills on Time
One late payment can take as much as 100 points off a good credit score and 30 points off a fair to poor credit score. Late payments have the biggest negative effect on your credit score. One way to make sure bills are paid on time is to set up automatic bill payment. If you have paid late, get them current as soon as possible and try to stay current. Timely payments over several months will get your credit score back on track.
3. Retain old or unused credit accounts
Never close unused or old credit card accounts. Closing an older credit card account may actually lower your credit scores. Once a you close an old credit card account your credit history will appear shorter. The length of your credit history accounts for 15% of your credit score. It is better to keep the account open and not use it or just use it infrequently. A long credit history helps your credit scores.
4. Get a credit card
Get an unsecured or secured credit card if you have a limited credit history or a low credit score. A new credit card reporting to the major credit bureaus can help you build or rebuild credit. Never max out new or old credit accounts. Make small monthly charges and pay them off on time and in full each month and watch your credit score rise fast and sky rocket! If your credit is bad try an unsecured Visa to rebuild credit. If you cannot qualify for an unsecured credit card, try a secured credit card. A retail credit card for bad credit will even suffice to help build credit.
5. Authorized User Credit for a Quick Boost
Authorized user credit can be an instant way to boost your credit scores. The three major credit bureaus, Experian, Equifax and Transunion, utilize a credit scoring model known as FICO (Fair Isaac Corporation). An established account holder, with positive credit information, will likely have good FICO scores. With authorized user credit, the credit card company will report to your credit files as well as the account holder.
There are risks in becoming an authorized user on someone else’s credit card accounts. If the account holder becomes delinquent this will also reflect on your credit files, even though you are not financially responsible for paying any delinquency as an authorized user. Read more about Authorized User Credit.
6. Request a deletion for settled negative debts
If you pay a collection or settle a debt make sure you obtain a deletion and not a “paid collection” entry. This also applies to paying a debt directly to the creditor. Paid collection entries do not raise your score. Once you get a collection entry on your report that is put into the negative category on your credit report. A paid collection remains under the negative category on your credit report. You will not see an increase in your credit scores with paid collections.
Request a pay for deletion. A pay for deletion is a request made by you to the creditor or collection agency to pay a debt in full or an agreed upon percentage in exchange for a deletion of the account or trade-line. Never let a creditor tell you they cannot change or delete something they put on your credit report as there are no laws or rules that dictate anything must stay on your credit report for the full 7 or 10 reporting years. Remember to get everything in writing. See Deletions.
7. Rapid Re-Score your Credit Files
Rapid Re-Scoring can correct negative, outdated and inaccurate information in your credit report in as little as 72 hours! If you are in the market for a mortgage loan, refinance or home equity line of credit, your lender or mortgage broker can have your credit files rapid re-scored.
It is a service offered by a lender or mortgage broker in which your credit scores can be re-analyzed and quickly corrected for the purposes of obtaining a residential or commercial real estate loan.
There is a small fee for the service. Typically the fee is charged for each item that is corrected. The service is only offered by through a lender or mortgage broker. Consumers are not eligible to pay for the service on their own. Rapid Re-score accelerates the dispute process, corrects negative information and increases your credit score immediately. Learn more about Rapid Re-scoring.
8. Look for errors on your credit reports
The credit bureaus receive tons of information daily and mistakes are bound to be made. Disputing inaccurate items can raise your credit score if those items are deleted or corrected.
It is very common for credit reports to contain errors, inaccurate, and obsolete information. Never assume this type of information somehow drops-off at the 7 year mark. Sometimes you have to dispute this information in order to get it deleted. Other types of information that should be deleted or corrected are:
- Charge-offs and collection accounts with factual errors should be disputed
- Accounts that are listed as unpaid hat should have been included in bankruptcy
- Negative accounts that do not belong to you
- Negative accounts that should have been deleted once the 7 year mark has been reached.
- Accounts showing paid late that you really paid on time
- Account balances being reported as credit limits or credit limits not being reported at all
9. Write a Goodwill Letter for Late Payments
As mentioned above, one late payment can take as much as 100 points off a good credit score and 30 points off a fair to poor credit score. You may have simply overlooked the payment one time and your credit score should not have to suffer. Many creditors understand this and will work with you if you normally pay your accounts in a timely matter. Write a goodwill letter requesting removal of the late payment from your credit report. See a sample goodwill letter here.
10. Add an installment loan to your credit mix
Credit mix accounts for 10% of your credit score. The credit scoring formula will add points to your credit score if you have an installment loan reporting. Installment loans are personal loans, auto loans, mortgage loans, home equity loans and even student loans. Installment loans carry a lot of weight with banks, lenders and the credit scoring formula. Installment loans show creditworthiness and that you are a good credit risk. They can work wonders on your credit files and help you raise you credit scores fast.
If you don’t have an installment loan reporting in your credit files and you don’t want to make a big purchase such as a car or home, consider getting a small personal loan that can be repaid over few years. Even if your credit is less than perfect you may qualify for a secured personal loan at your bank or credit union. Some banks will let you get a secured personal loan for as little as $500. It really does not matter the amount of the loan, just as long as the monthly payments are made on-time and reported to the major credit bureaus.
Installment loans also act as a cushion for your credit score. If you have only revolving accounts such as credit cards and retail accounts to calculate a credit score and you miss a payment, having an installment loan will help balance out the information used to calculate you credit score. Any hit your score might take because a missed payment will not hurt as much.
