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Improving your credit score is one of the pillars of personal finance. Maybe you want to buy a house or car and need to improve your credit score to ensure you get the best interest rate possible.
Or, maybe you need to improve a credit score that is a little lower than you like. Taking steps to improve your credit score today will benefit you forever. We are going to show you how to improve your credit score and why you may want to start working towards a better credit score today.
How Long Does it Take to Improve Your Credit Score by 100 Points?
The biggest factor is your starting point and individual history. Some people have been able to improve their credit score in 6 months. For someone with a lower credit score, this time horizon is possible. Others may take 24-36 months. Your individual history matters.
If you are diligent in working to improve your credit score by recognizing errors in your credit report and getting it corrected. Or paying off your debt, deleting negative items, and most important of all, making timely payments, then you can significantly improve your credit score.
Surprisingly, improving one’s credit score is not always a priority for many people. Unless, they need to increase a few points of the credit score so that they can qualify for a loan. If you have found yourself in a similar situation and are looking forward to getting a better interest rate, then taking the necessary steps to ensure your credit score is bumped it will be worth your time.
There are a number of days you can improve your score. There is really no way of knowing or predicting just how soon your credit score is going to improve, and by how much. Nevertheless, those who want their credit score to increase can try a few ways to make that happen within the least amount of time.
How To Increase Your Credit Score by 100 Points in 6 Months?
Many people do not know this, but it is not difficult to improve your credit score and get it back on track in as little as six months. That’s right. The truth is, you can boost your credit score up to 100 points in just about no time, provided you follow the right steps.
Pull Your Credit Report
The first thing that you will need to do is pull your credit report and examine it closely. Try to find anything that is suspicious or something you do not recognize. For instance, if you are faced with an issue of ID theft, then contact the appropriate enforcement agency and get it sorted out.
Also, pay attention to how much credit you are using on your different accounts. This is known as the debt utilization ratio and is an efficient way of improving your credit score. The trick is to keep your credit usage of all your credit cards less than one third.
Pay Down Debt
Now, be aggressive when it comes to lowering your debt utilization ratio, as in, pay down your balances. A great way of doing this is to get what is called a consolidation loan, which is far better at bringing down your utilization ratio as compared to sending off large checks. While you will still have the same amount of debt, it will be in the form of an installment loan instead of a revolving account. It should also be noted here that a consolidation loan may not be available for those who have a credit score that’s lower than 620.
Address Any Errors in Your Credit Report
If you do not owe the money, you should send a letter to ask the company to prove you owe the money. The good news is, you do not have to read books on federal law; all you have to do is ask. Call up collection agencies to try and get a settlement on the collection. You can also assure them that you will pay off the money you owe if they will remove the collection from the credit report. Also, try to get any late payment notices removed as well.
Can You Improve Your Credit Score by 100 Points in 30 Days?
The short answer is – yes. It is very much possible to improve your credit score by as much as 100 points within 30 days, give or take. Much like how you would work to improve your credit score in as less as six months, you will need to do the following steps:
| Improve Your Credit Score by 100 Points in 30 Days | |
| Step | What to Do |
| Step 1 | Get a copy of your credit report |
| Step 2 | Find any discrepancies or negative accounts |
| Step 3 | Dispute any credit inquiries |
| Step 4 | Pay off your credit card balance |
| Step 5 | Contact collection agencies |
| Step 6 | Remove late payments |
| Step 7 | Get added as an authorized user |
Step 1: Get a copy of your credit report
You can pull a copy of your credit report for free from a number of credit card providers. You can also do this at credit karma or any other credit reporting website.
Step 2: Find any discrepancies or negative accounts
Look through your accounts and complete your due diligence so you can ensure you are ready to work towards improving your score.
Step 3: Dispute any credit inquiries
Call your credit card provider and dispute any credit inquiries.
Step 4: Pay off your credit card balance
Make sure you pay off your credit card balance in full. This is extremely important.
Step 5: Contact collection agencies
Remember, you do not have to pay if a collection agency does not remove the account from your credit report
Step 5: Remove late payments
Step 7: Get added as an authorized user
How Much Will Paying Off Credit Cards Improve The Score?
If you are able to pay off a credit card balance, you can help to not only improve your credit score, but you can also improve your credit utilization ratio as well. This is extremely important for people to understand since not many people know that the credit utilization ratio makes up for around 30% of your total credit score, which makes it a very important factor, and reason enough for you to pay off all of your credit card balance.
The credit utilization ratio is an indicator of just how much of your available credit you are using at the moment. The credit utilization ratio should always be at 30% or below if you want it to help your overall credit score. For example, if you have an outstanding balance on your credit card of $4,000 with $10,000 as your total line of credit, then you will have a credit utilization ratio of 40%. That being said, it is also possible for a person to have more debt but still have a lower credit utilization ratio.
Regardless of your scenario, if you find that you’re carrying a credit card balance, then it is always best to pay it off as soon as possible to improve your credit score. Paying off your credit card balance does not only mean getting a better credit score but also lower interest rates. This means you pay less in the long run.
Andrew is the host of The Personal Finance Podcast, a show that is changing the way you think about your money. His primary goal with the podcast is to bring as much value as possible to his listeners.
Andrew's favorite free financial tool he's been using since 2014 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free. It has no trading fees and is his preferred way to invest without having to lift a finger.
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