How fast can you raise your credit score?
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Living in a money-savvy family, you likely understand the importance of good credit. Being a responsible borrower goes a long way toward keeping your score up, but what happens when you're new to building credit or recovering from tough times?
Your score can rise again, even after a drop. But how fast does a credit score go up, and how can families make that happen more quickly?
Understanding credit scores
Credit scores are like grades in school: the higher, the better. A perfect score is 850, and 1.5% of Americans have earned this bragging right.
According to FICO, which calculates and posts credit scores, anything above 800 indicates an "exceptional borrower." Working down from there, the classifications are:
740-799: Very good, above average
670-739: Good, at or slightly above average
580-669: Fair, slightly below average
Under 580: Poor, below average
The better your credit score, the more favorably you compare to other borrowers. You'll typically qualify for better loan and credit card terms because you're a responsible borrower, and lenders want to win your business. You'll have a wider variety of loans to choose from and may even qualify for discounts on your car insurance.
How quickly can you boost your score?
How fast you can bring your credit score up depends on two things:
Why it’s lower than you want
How you fix it
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If you do something that makes a big difference, like pay off a credit card in full or remove an error, you could see a score increase in 30 to 45 days. That’s how long it takes lenders to report to credit bureaus.
You'll have to wait longer if you have negative marks like late payments or a default that needs to be cleared from your credit report. Equifax estimates it could take a year or more. But that doesn’t mean your hands are tied in the meantime.
According to a study by LendingTree, some of the most effective ways to increase your credit score include:
Paying down loan balances
Paying off your credit cards as much as possible
Prioritizing on-time payments
Tactics like these resulted in an average increase of 127 points within a year in the study.
Factors affecting your credit score
The more you know about credit score benefits, the more urgent the question of "How fast can your credit score increase?" becomes.
The more changes you make, the quicker you can see improvements. See how you measure up in each of the following areas, and start to make changes accordingly.
Payment history
Your payment history — whether you pay credit and loan bills on time — counts for 35% of your credit score. Most creditors don't report "late payments" if you're only a few days behind, but be careful not to miss a payment by 30 days or more. Late payments can cause a hit that affects your credit for up to seven years.
Credit utilization ratio
The second most important factor in your score is credit utilization, or how much of your available credit you use. For example, if you have one credit card with a $10,000 limit and a $2,000 balance, your utilization is 20%. Equifax, one of the three major credit bureaus, recommends keeping your credit utilization at or below 30%.
Credit history
Your credit score increases as your borrowing history gets longer, especially if you've managed different types of debt. The ideal borrower has successful experience with loans and what lenders call "revolving" credit.
Revolving means you have a balance and can borrow up to that balance. Credit cards are the most common example. If your family has a home equity line of credit, that counts too.
It's important to build credit starting as early as possible. Even teens can become authorized users on their parents' accounts and apply for their own cards once they turn 18.
More experienced borrowers can focus on maintaining old accounts. Cards that don't charge annual fees are generally worth keeping open, but lenders may require some activity. Consider putting a lower-priced subscription on those cards.
Credit mix
Your credit mix refers to the different types of credit accounts you have. Common types of credit include:
Revolving debt: You can borrow up to a set limit if you make regular payments according to the lender agreement. Credit cards count as revolving debt.
Installment loans: You borrow a lump sum and make regular payments, usually with interest. Auto loans and student loans are installment loans.
Credit mix is usually a minor factor in your overall credit score.
What brings your credit score up the fastest?
So how fast can your credit score go up? Here are a few things that can help in the short and long term.
Make on-time payments
Making on-time payments is the number one way to increase your score. You can do this in a few ways:
Add your bill due dates to your calendar as recurring events.
Set reminders to send the payment.
Set up automatic payments. Many credit card issuers and lenders offer this option. You can choose when the payment happens and whether to pay the minimum, the total statement balance, or a set amount.
Improve credit utilization
Credit utilization is the second most significant influence on your score. The less of your limit you use, the better. But, that doesn’t mean you should open new accounts to increase your credit limit. Creditors don't like seeing multiple new applications simultaneously. Instead, work on paying down your balances.
Another way to reduce your utilization ratio is to request a credit limit increase without using the card more. Say your balance is $500, and your limit goes from $1,500 to $2,500. Your ratio instantly drops from 33% to 20%. You could even see a quick boost to your score.
Keep paying your bills on time, and pay more than the minimum whenever possible. Ideally, pay the full balance each month to avoid interest fees that add to your debt.
Finally, avoid the temptation to decrease your ratio by getting a new card. When you apply for credit, the lender will conduct a hard inquiry into your credit score. Hard inquiries can lower your score, especially if you apply for multiple cards quickly.
Removing incorrect information
If your credit score drops because of a mistake, removing it is the quickest way to bring your score back up. Identify errors by carefully reviewing your credit reports.
There are three major credit bureaus, each maintaining a credit report detailing your borrowing history. Federal law allows you to receive each report for free once a year. All three credit bureaus offer free access.
Getting rent and utility payments reported
Payments like rent, electricity, heat, and water don't usually appear on your credit report, but you can change that. The simplest way is to sign up for a reporting service that will scan your accounts for on-time utility, rent, and even streaming service payments. The service will send that information to the credit bureaus so they can count toward your on-time history.
If you only need to report rent, ask your landlord if they provide that service. Some landlords and property management companies offer rent reporting, often at no cost to the tenant. If your landlord doesn't participate, tenant-pay options are available from rent reporting companies.
Start working on your credit score
Building strong credit habits can benefit everyone in your family. Paying on time, not using your credit card too much, and checking your credit reports are all part of being money-savvy.
With Greenlight Infinity, you and your kids can build strong money habits together. Access savings opportunities, learn to invest together, and get all the resources you need to answer these critical money questions.
Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.
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