Raising your credit score by 100 points is no easy task and it won’t happen overnight.
But there are ways to speed up the process.
You might have “quick-fix” items that, when addressed, result in dramatic score increases. Other issues may take up to seven years to allow a 100-point increase.
Here are common "quick-fix" and "long-haul" credit issues.
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Quick-Fix vs Long Haul
When it comes to credit, scores don’t tell the whole story. Two people might have a 650 score. One could raise it to 750 in a few weeks while the other person could take seven years. Let’s look at each scenario.
Quick-Fix Issues
Here’s a list of credit problems that are relatively quick and easy to fix.
Bona fide errors
Maxed-out credit cards
Late payments that the lender agrees to delete
Long-Haul Issues
Issues that indicate a disregard for obligations hurt your credit for longer.
Late payments that the lender does not agree to delete
Charge-offs
Collections
Bankruptcies
With those in mind, let’s examine strategies that could help you raise your credit score as quickly as possible.
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To address issues, first, you have to know what’s on your credit report,
The government mandated a site at which consumers can check their credit for free: AnnualCreditReport.com. It does not show your scores, but you can check your accounts and history.
This is a good place to see if there are any errors. You can also check for late payments and other derogatory information you weren’t aware of.
Fortunately, many credit card companies, banks, and credit unions offer free credit monitoring at no extra charge, and may even show your scores. Check with your financial institutions.
Get started on your home loan. See if you can be pre-approved here.
Quick-Fix: Rapid Rescore
A rapid rescore is when you fix credit issues and want them to reflect on your report right away. A lender can request a new credit analysis from the bureaus in light of the changes.
This tool comes in handy when applying for credit. For example, a mortgage lender says your credit score is 10 points away from a 0.25% improvement in rate. It could be worth paying down a maxed-out credit card to zero, getting the rapid rescore, and hoping for a 10 point increase.
You could also pay down the credit card and wait about 30 days for the change to reflect naturally, but those seeking credit often don’t have this much time.
Keep in mind that not all fixes will result in a higher score. Paying off a charged-off account or a collection won’t help. And, lenders may not agree to do a rapid rescore. Due to mortgage laws, they can’t pass the $500+ cost on to you.
It’s best not to rely on a rapid rescore, but instead check your credit and address problems months before you need a loan.
Quick-Fix: Pay Down Credit Cards
Paying down credit cards is probably the fastest way to improve your credit score.
Credit bureaus give you high scores if your credit card balances are below 30% of the available limit. Zero to five percent is even better.
If you have the savings, pay down all credit cards to zero or close to it. Someone with a few maxed-out credit cards could see their score rise by 100 points within 30 days.
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Quick-Fix: Dispute Errors
In today’s world where your information is being stolen multiple times per year, it’s quite possible that someone has opened credit in your name, potentially ruining your credit.
First, report such incidents to the authorities. Then gather documentation that you were a victim of identity fraud. Dispute the erroneous account using this documentation.
There could be less egregious errors, too. For example, a creditor reported a late payment but you can prove the on-time payment. Dispute the error and submit the documentation to the bureaus.
However, don’t dispute valid items. Credit bureaus won’t remove them unless you have documentation proving your case.
Quick Fix: Request Late Payment Forgiveness
Creditors can delete a late payment from your account. You can request this with a phone call or letter. Typically you have to show a stellar account history afterward.
You can also offer to pay the debt off in exchange for removal of late payment information.
Typically, a late payment stays on your credit for seven years, so it’s worth asking.
Quick Fix: Request Higher Credit Card Balances
Your score rises when your credit card balances are below 30% of the available limit. You can pay down your balance, but you can also request a higher limit.
Having $7,000 on a $20,000 limit is a 35% “utilization ratio.” But it’s only 28% of $25,000.
Long-Haul: Avoid New Credit Inquiries
A few hard inquiries don’t drag down your score too much. Nor does shopping around for the same financial product, like a mortgage.
But inquiring about many types of credit within a short time is a signal that you’re desperate for funds or about to incur too many debts. For example, inquiring about a credit card, mortgage, car loan, and boat loan within two weeks is a huge red flag.
Avoiding hard inquiries is a preventative measure that keeps your score from dropping further.
Long-Haul: Wait For Derogatory Information to Fall Off
Late payments, charge-offs, and other negative info affect your credit for seven years. Don’t expect a big jump by paying off these accounts.
This is a waiting game. The longer it’s been since the event, the more your score will rise. But you may have to wait the full seven years before attaining a very high credit score.
Long-Haul: Don’t Close Credit Accounts
Credit bureaus like to see long-standing accounts with great history. Closing a credit card that you’ve had for years can hurt your score, even if you no longer need it.
You get higher credit scores when you have access to credit but don’t use it.
Long-Haul: Beware of Credit Repair Agencies
It’s tempting to sign up with a company that says they can fix all your credit problems overnight. But many simply dispute every item on your credit report and hope bureaus will remove them. Legitimate agencies know credit law well enough to attain higher scores for you, but be cautious when considering credit repair.
Long-Haul: Secured Credit Cards and Credit Builder Loans
Certain credit cards and services can issue you credit based on an initial deposit. For example, you pay $1,000 for a credit card limit of the same amount.
You make payments as with a normal credit card or loan. The creditor reports on-time payments to the bureaus.
However, these aren’t fool-proof. The Consumer Finance Protection Bureau found that 39% of credit builder loan customers made late payments, hurting their credit further.
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Long-Haul: Improve Your Credit Mix
You get better credit scores by having a mix of credit types, says MyFICO.
- Installment loans like student and car loans
- Revolving accounts such as credit cards
If you only have three credit cards, you can improve your score by taking out a small car loan or personal loan. However, to avoid paying too much interest, it’s best to have the cash on hand, keep the loan open for a few months, then pay it off.
Long-Haul: Adding Bills to Your Credit Report
A few services are arising that let you get credit – literally – by paying bills. The service pays your utilities, phone bills, and other monthly payments. You pay the service the same amount plus a fee. The company reports the payments to all three credit bureaus.
Non-debt monthly payments and even rent usually don’t show up on your credit report, but these companies can change that.
It’s Possible to Raise Your Score 100 Points
If you can put in the work, you can raise your score. It can take time. Be patient and you can reap the benefits of better credit.
Get a personalized review of your scenario from a lender.
About The Author:
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.
