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Tips to Improve and Increase Credit Scores Quickly

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So you want to increase your credit scores? It’s quite straightforward. The information found on your credit report is used to calculate your score. Therefore, first and foremost, the information on your report must be accurate. According to a study by the FTC, one in five people have errors in their report.

To Improve Your Credit

The first step is to request a free copy of your credit report through AnnualCreditReport.com. It’s the only federally mandated website to access all 3 credit bureau reports for free. Then follow the additional steps below:

  1. Review your personal information. Start by verifying your name, address, and employment information. Although this will not improve your credit score, an inaccuracy could impact a loan decision.
  2. Check public records. If you have any collection accounts, judgments, or liens you’ll see that information in your credit report. Dispute information that is incorrect or inaccurate such as balances owed. This process may take some time but once removed from your credit report can increase your score. The contact numbers can be found next to the collection agency reporting the public record.
  3. Check account accuracy. Verify the report reflects the right information. Verify the names of the creditors, dates opened, payment history, and credit balances and limits. Incorrect credit balance and limits can impact your credit utilization affecting your score. Dispute any and all inaccurate information. This can be done online.

Correcting Inaccurate Information and Disputing Records

Verify the information is correct and dispute all inaccurate information with the creditors. You can easily dispute inaccurate information directly with the credit bureau using their website. For example, an old credit inquiry or a misreported credit application can ding your credit.

Tactics to Increase Credit Scores

Remove Negative Information

After careful review and discovery of incorrect information, it’s time to start the process of dispute and removal. Disputing inaccurate information can help increase credit scores.

  • Remove negative trade lines. If you have negative information on a credit report that is older than 7 years, you can have that information removed. Make sure to keep all positive history in your account.
  • Settle collection accounts. Contact the collection agency and agree to a settlement of the debt that you can afford to pay today. Request a “pay for delete” and make sure you keep records of the name of the person you’ve been working with, dates, times, and details of the conversation. If the collection account is not yours, request a “debt verification” letter.
  • Push delinquencies further in time. If you have a late payment posted on your credit report, make on-time payments and push that delinquency further in time. The older the delinquency the less impact on your credit score.

Get More Credit

  • Increase your available credit. Pay down your credit balances to free up the available credit. Credit score algorithms look at your available capacity. If you’re near the credit limits, your credit scores are impacted negatively. Start paying them down to increase available credit. You can also request a credit limit increase or apply for new credit. Of course, this will only work if you can get approved. Just make sure you don’t start using the new credit line.
  • Add to the credit mixture. Credit reports look at the types of credit on your profile. If you have too many credit cards, then adding an installment loan such as a personal loan will help boost your score. A good way to add mixture is by opening up a secured credit card or secured loan for a small amount and making on-time payments.
  • Become an authorized user. Get added as a user on a credit card that has a high limit and low balance with excellent repayment history. Your spouse, partner, best friend, or sibling can help you.

Add Your Rent or Utilities

Typically rent and monthly utility payments are not reported on your credit file. It seems rather strange since landlords and utility companies will use your credit report and score. Increasingly, services are available that report your rent, utility, and cellular service payments. This can give you a slight credit score boost. Experian, for instance, offers Experian Boost.

Increase Credit Scores Quickly? Focus on Credit Utilization

Here’s a very fast way of increasing credit scores. Pay down your credit card balances in full or get it below 10%. As noted earlier, your credit utilization or credit capacity is 30% of your FICO score.

You might have also heard that closing a credit card negatively impacts your score. The reason has to do with the impact on your credit utilization ratio.

For example, you have two credit cards. One has a $5,000 limit and the other has a $10,000 limit. Each month, you use your credit card for about $1,500 worth of expenses, which brings your utilization ratio to a safe 10 percent.

LimitsBalanceUtilization
Card 1$5000$1,500
Card 2$10000$0
Total$15,000$1,50010%

However, you decide that because you never really use the card with the $10,000 limit, you’re going to cancel it, but you don’t change how much you’re spending each month. Now, your credit utilization ratio has jumped to a whopping 30 percent, which can cause your score to drop.

LimitsBalanceUtilization
Card 1$5000$1,500
Card 2 closedclosed
Total$5,000$1,50030%

What can you do?

  • Keep all existing credit limits and pay down debt balances
  • Open a new credit card to add to your total credit limit
  • Request a credit limit increase with existing cards

Jason Vitug

Jason is the founder of phroogal, creator of the award winning project Road to Financial Wellness, and author of the bestseller and New York Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life.

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