There’s a lot of fuss around credit scores for a reason. Higher-risk borrowers—such as people with histories of late payments—usually get lousy loan terms. But it can be smooth sailing ahead for lower-risk borrowers. A better credit score gives you access to better opportunities and allows you to save big on major contractual terms, from interest rates to down payments.
Read on to learn a few great ways to improve your credit score.
Always pay your bills on time
Set up automatic payments to ensure you’re never behind. Late payments can create a huge hit on your credit score and last for over seven years. If you find you’re always scrambling to make your due dates, tell your creditors your concerns. It’s often possible to change your monthly due dates to mirror your cash flow (for example, switching your due date to payday).
The major credit bureaus (Experian, TransUnion, Equifax) give a lot of weight to on-time payments and a healthy payment history. Establish good habits, save easy-to-access cash in an emergency fund and sign up for lender emails, texts, or phone notifications to ensure you always know where you stand.
Make multiple credit card payments
Aim to make credit card payments twice a month. It’s a simple move that can strengthen your credit score, reducing your credit utilization ratio halfway through your billing cycle. It’s also just another good money move that will position you as a responsible borrower in the eyes of creditors.
Maintain a variety of credit types
If it makes sense for your needs and lifestyle, consider maintaining a mix of different credit types to show you’re capable of managing various financial responsibilities. There are lots of options to choose from, just pick a few that meet your needs—whether that’s credit cards, a car lease or loan, personal loans, student loans, or a mortgage. Think of it as a portfolio designed to show lenders who you are as a borrower. Show some range but be sure to rein in your spending.
Consider getting a balance transfer credit card
Saddled with credit card debt? The right balance transfer credit card could help you get more control over your debt and pay it off faster, with greater ease, gradually helping you increase your credit score.
A lot of these cards come with attractive 0% introductory rate offers. But before you move ahead, read the fine print, compare options, and have a complete understanding of any fees or interest rate changes that might be introduced after a certain period of time. And be sure to stop using your other credit cards until you’ve paid off this entire balance. If not, you can easily end up in the same situation twice.
Pro tip: If you’ve maxed out your credit cards, consider getting credit counseling to build stronger habits.
Piggyback on excellent credit
Become an authorized user on a friend or family member’s credit card. If they have excellent credit, you can “piggyback” on theirs, improving your own credit score in the process. They don’t even have to give you your own card.
Ask for a higher credit limit
The ideal way to improve your credit utilization rate (in turn, helping you improve your credit score) is to use less of your available credit. The big credit agencies want to see you use 30% or less or your credit at any given time. Sometimes, that’s just not possible, even if you do plan to pay it off when payday rolls around. That’s fine.
Another way to make it happen is to simply request a higher credit limit. Credit card companies will want to see a good credit history with on-time payments and appropriate income levels before they’ll grant your request.
Check your credit report
Give your credit report a review every now and then. You can pinpoint inaccuracies to dispute any credit report errors as soon as they emerge. Often, the earlier you can detect an issue, the easier it will be to resolve. And of course, the closer you’ll be to having a better credit score.
How fast can you raise your credit score?
Unfortunately, you can’t boost your credit score overnight, but you can take action today and see improvements in the near future. In fact, if your credit score has taken a hit because of your credit utilization ratio and you pay off a significant chunk of debt all at once, it’s one of the fastest ways to see a substantial increase in your credit score.
But as a general rule of thumb, treat your credit score like you’d treat your health. Sometimes there are circumstances outside of your control, like catching this season’s flu, but you still take care of yourself on a daily basis to optimize for success.