How Fast Can a Credit Score Increase?

iQuanti: Having a strong credit score can open up numerous opportunities like better loan terms, easier mortgage and auto loan approval, and higher approval chances for better credit cards. But if you're working your way up from poor or fair credit, you might be wondering how long it takes to get there.

The amount of time it can take to boost your credit score depends. You can increase your score in the short term with a few tactics, but some methods may take longer. Here's a closer look at some ways that you can improve your credit score:

Short-term credit score boosting

Need a better credit score in the short term? Here are a couple of ways to give your score a quick boost:

Dispute credit report errors

Sometimes, errors show up on your credit report. These could be old bankruptcies or late payments that were never taken off at the right time, or they could be total mistakes. In either case, they're hurting your score. Disputing these with the credit bureaus and having them removed could boost your score within a couple of days.

Pay down a credit balance

Credit utilization, or the amount of available credit you're using on all your credit cards, is the second most important part of your credit score. It also considers individual credit card balances and limits. So, paying off a credit card with a higher balance can give your score a quick boost.

Report bills

Not all bills are reported for credit purposes — unless you fail to pay them. If you're great about paying everything on time, some apps let you report these payments to the credit bureaus and get an instant boost.

Request late payment removal

If you made a late payment, you may be able to request it to be removed from your report. To do so, contact the party you made the payment to and ask them for a goodwill adjustment. Although they may turn you down, you may be able to negotiate a yes.

Long-term credit score boosting

After exhausting your short-term opportunities, it's time to work on the long game. Here are some ways to boost your score over the long term.

Make every payment on time

The most important factor impacting your score is your payment history. The longer you maintain a perfect payment history, the better your score.

It's fine if you missed or made late payments in the past, but from this point forward, try to make every payment on time if you can. As those missed and late payments retreat further into the past, your score will increase.

Successfully handle more debt

The number and diversity of credit cards and online loans you have has a decent impact on your score. Slowly opening more accounts and keeping them in good standing can help immensely. Additionally, your average account age — another big score factor — will increase with time.

Keep your credit utilization low

Since your credit utilization is the #2 credit score factor, you should strive to keep it as low as you can manage. A rule of thumb is to keep your total utilization below 30% at the very least. Aim to do that across all your credit cards. And if you can keep it significantly below 30%, you may see additional score increases.

Increase your credit limit

Increasing your credit limit whenever possible can also improve your credit score, as this can lower your credit utilization ratio. Just make sure doing so won't encourage you to spend beyond your means.

Some creditors will automatically increase your credit limit if you have a good payment history or provide updated income information. Others may want you to ask for a credit limit increase first — they'll then run a credit check before offering you the increase.

The bottom line

Raising your credit score is a short-term and long-term game. You can do a few things to get an immediate boost, but much of your progress happens over time. By building good credit habits, you'll see your score rise consistently. Eventually, you may have access to all the perks of excellent credit.

Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.


Categories: Personal and Family Finances

Tags: credit score, financial services, personal finance