How to Raise Your Credit in 30 Days
- November 1, 2017
- Posted by: Jeff Gitlen
- Category: Credit Scores
When it comes to personal data, you might think of your address or Social Security number as the most powerful piece of information about you. Your credit score, however, in some ways holds more power than any other part of your personal information. Many people think of credit scores as only important if you’re applying for a loan or credit card, but in today’s world they’re used for a lot of things that have nothing to do with loans.
If you have a poor credit score you may be denied if you try to rent an apartment, and a hiring manager may pass over your application even if you’re highly qualified for the position. Even volunteering opportunities with many charities may be out of your reach if your credit score is too low; a credit report is now part of a standard background check. Without a solid credit history you can find many doors closed to you; there are, however, ways you can learn how to improve your credit score in 30 days. Let's check them out below.
Lower Your Credit Utilization Ratio
If you tend to reach for your credit card first when making purchases, stop. Credit utilization – or how much of your available credit you’re using – is a huge part of your credit score because it tells a story about how you use credit. In fact, this alone is responsible for 30 percent of your credit score.
Do you only dip into your credit card for emergencies? Do you pay off your balance every month? Do you carry high balances on multiple cards? All of these factors play a role in your credit score, and changing how you use credit can get you a higher score fast. Lowering your credit utilization ratio is an important way for you to improve your credit score.
There are several ways to lower your utilization ratio. You can request a limit increase; if you owe $2,500 on a card with a $5,000 limit, for example, you have a utilization ratio of 50 percent, but if you can get your limit increased to $6,000, your utilization will drop to 41 percent, and that translates to a few points more on your credit score.
If you can do it, making even one sizeable payment on a card also helps lower that ratio. If you’re in the habit of making the minimum payment every month, making a much larger payment can give your credit score a much-needed boost.
Remove Incorrect and Negative Marks
In 2012, the Federal Trade Commission found that approximately one in every five people caught at least one mistake on their credit report. Five percent of them had errors so serious that they had been denied credit or had to pay higher interest rates than they should have. And almost one in ten saw an increase in their credit score after getting the errors fixed. The moral of this story is simple – get errors off your report.
With three major credit bureaus maintaining separate reports on you, you’ll have to check all of them. You can receive a free copy of your report once per year, or if you’ve been denied credit in the last 60 days.
If you find an error, contact the credit bureaus and your state attorney general’s office. Credit bureaus tend to be slow and sloppy when fixing errors, and bringing in the state’s AG can help speed that process along. You can also contact the original creditor as well; errors in their records will translate to errors in reporting.
Stay Away From Credit Repair Scams
If you’re trying to improve your credit score fast, you may be tempted by ads for credit repair that promise to get you stellar credit quickly. Most of these offers are scams that can not only take what money you do have, but can even get you arrested and imprisoned for fraud. In fact, attorneys at the FTC say they’ve never seen a legitimate credit repair operation.
You can recognize a scam pretty quickly if you know the signs:
- They demand you pay a fee upfront before they do anything for you
- They tell you never to contact the credit bureau yourself
- They tell you to dispute everything on your report even if it's correct
- They don't explain your legal rights
Worse, some scammers give you a “credit profile number” or some other customer number that’s nine digits long, and tell you to use that when applying for credit. What they don’t tell you is that it may be a Social Security number that’s stolen; when you use it, you commit felony fraud.
The bottom line is that true credit repair – going from a low score to a very good one – takes time and discipline. You can, however, gain some initial progress very quickly by lowering your credit utilization ratio or fixing errors on your report. That progress will get you started on the road to credit recovery.