7 ways to increase your credit score quickly(Read article summary)
Your credit score will determine whether you will get approved for loans, as well as impact the interest rate you'll pay. Here's how to get a better credit score quickly.
J Pat Carter/AP/File
Your credit score will determine whether you will get approved for credit cards, auto loans, mortgages, or other loans, as well as impact the interest rate you'll pay. If you aren't happy with where your credit score is today, take heart: There are some simple ways to improve it quickly. Once your credit score improves, you'll be able to enjoy perks like lower interest and insurance rates.
Note that while these tips will help you raise your credit score quickly, be patient and remember that it can still take 30–60 days to see any noticeable improvement.
Credit Utilization Ratio
Your credit utilization ratio makes up 30% of your credit score. It's the number that shows how much debt you have compared to your total available credit. The more unused credit you have available, the lower your ratio. For example, if the credit limit on all your cards total $10,000, but you owe $8,000, your credit utilization ratio is 80%. You're using 80% of your credit. That's pretty high — a ratio of 30% or less is ideal. There are three main ways to lower your credit utilization ratio.
1. Pay Down Your Debt
Using the above scenario, if you can pay down your debt from $8,000 to $5,000, then your ratio goes down to 50%. Once you lower your debt, your score will see a significant boost quickly.
2. Ask for a Credit Limit Increase
If you aren't able to come up with some cash to pay down your debt quickly, try to get your credit card issuer to raise your limit. If instead of having $10,000 in available credit, you have $15,000, your ratio would go down to 53% with a $8,000 debt. Keep in mind, however, that they'll usually only grant this if you've had a good record with them over the last year. If you've missed payments, you may not be able to get the increase.
3. Sign Up for a New Credit Card
If you've got a lot of credit card debt, getting another credit card may not be the wisest thing to do. But if you need to raise your credit score quickly, this may be your only option. If you can, try to get a card with a 0% intro balance transfer option, which will allow you to transfer your existing debt over and at least get a break from paying interest each month. (See also: Credits Cards With the Best 0% Balance Transfer Offer)
The length of your credit history makes up 15% of your score. If your score is low because you are new to credit, then you will just have to be patient. But you can build up your credit by opening up accounts now and keeping them in good standing in the future.
4. Keep Cards Open
You should not close any existing accounts, as each one continues to contribute to your credit history. In fact, many people hold the mistaken belief that closing credit card accounts will help their credit score, when it will likely have the opposite effect. The longer you've had your accounts, the more it adds your score. Even if you're no longer using your old credit cards, you can cut up the cards or lock them away, but don't cancel them.