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Want to learn how to increase your credit score fast?
Good for you! A better credit score can save you a fortune…like $240/month on your house payment, for a total of over $86,000!
And we have a proven plan for how to increase your credit score fast. No credit repair company needed!
How to Increase Your Credit Score Fast
Here’s a super simple 5-step plan to increase your credit score fast.
Step 1: Correct Errors
Credit reports contain simple errors all the time. And those errors can drag down your credit score. So step one is to pull your credit report, check for errors, and correct any errors you find.
You can get a free copy of your credit report from sites like freecreditreport.com or creditkarma.com.
Then check your credit report for errors like:
- Duplicate accounts
- Missing accounts
- Incorrect credit limits
- Incorrect payment history
- Any suspicious activity
If you find an error, contact the credit bureau reporting the error (Experian, Equifax, or TransUnion) and dispute that error. They have 30 days to correct your report.
Step 2: Try to Remove Late Payments from Your Report
Payment history is the most important factor on your credit score. In fact, it accounts for 35% of your credit score. That’s a big deal!
If you see a legitimate late payment on your report, you want to try to remove it. This doesn’t always work (some creditors will work with you on this, and some won’t), but if it works, your credit score will get an instant boost!
Here’s how you do it:
- Call the creditor.
- Explain why your payment was late. It could have been a one-time honest mistake. If you have multiple late payments, try explaining to your creditor that you’ve changed. You now understand the importance of paying on time, and you’re trying to turn your life around by painstakingly rebuilding your credit.
- Apologize for the late payment(s) and promise it’ll never happen again.
- Offer to set up auto-payments so your amount due will be automatically transferred from your bank account going forward.
- Beg the creditor to remove the late payment from the record.
If it doesn’t work, you’ve wasted a few minutes on the phone. But if it does work, it’s one of the most effective ways to increase your credit score fast.
Step 3: Get Current on All Other Past-Due Balances
If you currently have a past-due balance that hasn’t hit your report yet, get that account current asap.
Then call your creditor, explain why you missed the payment, confirm that it has now been paid, promise the creditor that this will never happen again, and beg them not to report the late payment to the credit bureaus.
Step 4: Lower Your Utilization Rate
“Amounts owed” accounts for 30% of your credit score.
The credit bureaus want to see that you’re not maxed out. They want to see you using less than 30% of your available credit limits. If you can get under 20%, that’s even better.
So first, try to pay down some of your balances. Especially on credit cards. Credit card debt is considered worse than debt like student loans, home loans, and even auto loans. Your credit score takes your credit mix into account (credit mix accounts for 10% of your credit score), so focus on those credit cards.
Then call your credit card companies and ask them to raise your credit limits. This will instantly lower your utilization rate. If your credit limit is $10,000, your $3,000 of debt is a 30% utilization. But if you get the limit increased to $12,000, that same $3,000 of debt is down to a 25% utilization.
Quick tip: when you ask for the credit limit increase, ask for a “soft pull”. A soft pull means the request won’t be reported as an official inquiry on your credit report. Inquiries knock just a couple points off your credit score, and when every point counts, you want to avoid any little hit if you can.
DO NOT CLOSE YOUR ACCOUNTS!!!
Closing your accounts would lower your available credit limits, which is a bad thing.
Plus, it would lower the average length of your credit history. Length of credit history accounts for 15% of your credit score, so you want to keep old accounts open forever.
Use old credit cards every couple months (for necessary purchases only!), and pay them off in full when you get your bills. This will keep your length of credit history growing and keep improving your credit score.
Step 5: Attempt to Settle Any Accounts in Collections
Do you have any accounts that went unpaid for so long your creditor turned your account over to collections? Ok, that’s bad. But it’s not the end of the world.
There is something you can do to soften the negative impact.
Contact the creditor (or the collection agency) and let them know you would like to settle. Settling means that you and the creditor will come to an agreement on the amount you’ll pay back on your account. You may not have enough money to pay back the amount you owe in full. That’s ok. Contact them anyway and let them know what you can pay.
Quite often, they will accept an amount less than the full amount you owe because they don’t want to have to hire lawyers to sue you for the full amount. It’s easier for them to work out a deal so they get some of their money back without a legal hassle.
Now, here’s the magic request: ask if your creditor will agree to a “pay for delete”. A pay for delete means they agree to remove the collections record from your credit history if you pay.
They don’t have to do this. You owe them that money. And they don’t owe you any favors. But it can’t hurt to ask. If they agree to a pay for delete, make sure you get confirmation in writing before paying.
If they don’t agree to the pay for delete, you still want to pay what you can to improve your bad credit. The record of the account having been in collections will remain on your credit report for 7 years. But having the account settled looks much better than an active collections account.
And the negative impact will be reduced as that settled account ages, then disappear at the 7-year mark.
How to Keep Increasing Your Credit Score
From now on, use credit responsibly to keep increasing your credit score.
You need to actively use your credit, so don’t cut up the credit cards. Use credit cards to buy things you need every month (like groceries and gas). Btw, this use-your-credit-cards instruction isn’t an excuse to buy a bunch of frivolous crap. Stick to the necessities!
And make sure you’re paying the balances every month in full and on time. If you have late payments on your report now, ask yourself why that happened.
If you simply forgot to pay the bill on time, you need a better system! Check out our post, Um…Excuse Me, But You’re Paying Your Bills Wrong, for some tips on how to keep this from ever happening again. Late fees and a credit hit are steep prices to pay for forgetfulness.
But if you had to make the conscious decision to pay that account late because there simply wasn’t enough money to cover all your bills, that’s something totally different. Take a look at our post, Help! I Can’t Pay All My Bills to get some short-term Band-Aid tips and some practical steps toward a long-term solution.
It’s imperative that you find a way to pay all your future bills on time. Really, you’ll never be able to get ahead with your quest to improve your bad credit, or your finances in general, if you continue to pay bills late.
Now that you’ve learned how to increase your credit score fast, you can continue boosting your score for years to come by making steady, on-time payments.
Additional Resources
How to Boost Your Credit Score 100+ Points in 30 Days Without Credit Repair! by Brian Diez
The Crazy High Cost of Bad Credit
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