When your credit rating is low, you may wish you could wave a magic wand to boost it. Nobody has overnight or super-quick fixes, but you can take steps to improve your credit score in 30 days. These six steps can lead to major movement in the right direction.
The three major credit bureaus update your credit reports about once a month, and your scores will adjust based on your most recent activity. The next time they recalculate your scores, you’ll want the information on your reports to be improved. Ready? On your marks, ready? Go!
1. Check your credit reports and credit scores
The first step is to find out what is being reported about you. If you want to improve your credit score in 30 days, you need to change what appears in your credit reports.
You can check your credit report from every U.S. credit bureau — TransUnion, Equifax, and Experian — for free every week through 2022 at AnnualCreditReport.com.
Next, get your credit scores. Your bank, credit card company, or lender may offer free access, or you can purchase scores from credit bureaus or a credit scoring service.
FICO scores are most commonly used, but VantageScores are also popular. For both, the numerical range is 300 to 850, with higher scores indicating lower loan risk. In general, the most important factors in your credit scores are your payment history and the amount of your debts.
2. Correct errors in your credit reports
Once you have your credit reports, read them carefully. You definitely don’t want to be penalized for something you didn’t do.
A 2021 Consumer Reports survey found that 34% of consumers discovered errors in their reports. Most were personal identification errors, such as the wrong name or address, but 11% were account information errors, such as an account you don’t recognize.
Inspect your reports for checking accounts that show up as overdue, unusually high balances, debts you paid a long time ago, and mysterious collection accounts. Look for evidence of fraud, such as loans and credit cards you never opened.
Also look for accurate but old information that should no longer appear on your credit reports. Most negative marks, including late payments, charges, collection accounts, and Chapter 13 bankruptcies, can stay on your credit report for seven years, according to the Fair Credit Reporting Act. Chapter 7 bankruptcies can be listed on your credit report for up to 10 years from the date of filing.
Clear bad data from your reports by filing a free online dispute with each credit bureau. You can also dispute a credit report error over the phone or by mail.
The credit bureaus will have 30 days to investigate. You will also need to dispute each error with the company that provided the information to the credit bureau. The company will investigate and advise the credit bureau whether to update or remove the information from your report.
If your credit reports contain errors that lower your scores, they will get a bump when that information is removed. Monitor your reports to confirm that offices are removing inaccuracies. If they continue to be reported, make sure they are marked as disputed.
3. Avoid late payments
Payment history is the most important factor for FICO and VantageScores. If you have skipped entire payment cycles, the credit issuer will notify the credit reporting agencies. The more overdue your account, the worse your scores.
Although you can’t eliminate evidence of chargebacks, you can improve your score by paying all your accounts on time. Once these payments are posted to your credit report, they will be reflected in your scores.
The improvement may not be huge at first as payment issues take time to heal, but every extra point counts.
“Raising your credit scores by just 20 points can put you in a lower interest rate category for credit cards and loans,” says Ray Smith, credit expert and president of Trycera Financial, Newport Beach, CA.
4. Pay off the debt
If your credit card balances are close to their limits, your credit ratings may suffer. Credit utilization is the second most important factor in your FICO credit score. FICO considers the amount you owe on each account as well as overall.
“Get your debt under 30% of the limit for an almost immediate boost,” says Jennifer Streaks, personal finance journalist and author of “Thrive! … Affordably”. “As you reduce the balance and open your lines of credit, your scores should go up.”
If you don’t have the money to pay off your debt, you have several options:
- Apply for a credit card with balance transfer. Consider moving your old debt to a new balance transfer credit card. “If your card has a $4,000 limit and you owe $3,000, that’s too high a percentage,” Streaks says. “But if you were to transfer it to a card with a $10,000 limit, it would automatically clear the first card’s debt and you’d only use a third of the new card’s limit. It’s a win-win .”
- Request a line of credit increase. Another way to quickly increase your credit ratio is to increase your line of credit. “If you paid on time and have a great relationship with them, ask for it,” Streaks says. “Increasing the line of credit will have the same effect on your utilization rate as paying down the debt.” Before you call, however, ask if this will result in a hard credit check, which can deduct points from your score.
- Consider a debt consolidation loan. By consolidating your revolving debt into a loan, you’ll eliminate your credit card balances and free up those lines. Also, an installment loan does not count against your credit utilization ratio because it is not revolving debt.
5. Add a positive credit history
If the information on your credit reports is food for your credit scores, make sure it’s plentiful and healthy.
Now might be a good time to open a credit account if you don’t have one. Credit cards are available even for people with low scores. Once you have a card, you can start debiting and refunding positively.
“For people with very few trade lines on their credit reports, we suggest applying for a secured credit card immediately,” Smith says. “Newly established trade lines will appear on your credit report within 30 days and immediately boost your credit scores.”
Other steps to improve your credit health:
Try Experian Boost. It’s free and can add one-time utility, phone, and streaming payments to your Experian credit report, which can improve your Experian credit score.
Get a loan to pay the rent. See if you can sign up for a rent statement service on your own or with the help of your landlord. Expect to pay fees for many services, such as Rent Reporters and Rental Kharma.
6. Maintain good credit habits
All of the above steps can lead to improved credit ratings in as little as a month. If your credit scores are in the middle range, you’ll likely see the biggest spike.
“The small stocks will have the biggest payoffs for you because there’s plenty of room for growth,” Streaks says. “If your scores are already high because your reports are full of great information, there’s not much more you can do. And if yours are very low, it will take longer to bring them up.”
Wherever you are today and 30 days from now, focus on maintaining good credit habits to keep boosting your credit scores. The points you’ve added to your scores with a few powerful actions are just the start.
“It’s very important to constantly monitor and work to improve your credit scores,” Smith says. “Aim to keep them at a minimum of 670. The next important level for credit scores with most lenders is 740, which generally gets you the best interest rates. credit is 800 and above.”
The sooner you start, the faster your scores will increase – without ever needing a magic wand.