Ok, so before I start. I want to apologise and say the title was a bit of clickbait. There is no reliable, good way to improve your credit score fast. Anything that can improve your credit score in a short period of time will most likely backfire and harm it in the long run.
Now that I got that out of the way, let me share with you simple, straight forward methods to improve your credit score, that are reliable, safe and sustainable.
Method 1: Correcting errors on your record
Believe it or not, but errors on your record are not uncommon so it pays to check it every now and again to get these errors corrected if they occur. If you don’t then your credit score might be lower than it should be.
You can normally check your record for free with no negative repercussions (because too many checks on your record is also a bad thing) once every year.
You can get a copy of your credit report from Transunion, they’re an international credit reporting agency with a presence in most countries. However, if Transunion doesn’t operate in your country than you can still easily get a copy of your credit report by Google searching “credit report (your country)”.
Once you get your report, you’ll want to check every detail for errors and file a dispute if needed.
Agencies must respond within 30 business working days and the correction should be seen almost instantly once the agency has responded. Depending on your error, your credit score will see an improvement.
Method 2: Stay below your credit limit
Your credit limit is the maximum amount you are able to borrow. It’s good practice to never actually borrow the maximum amount, be it your credit card limit, your ability for a personal loan or a mortgage. But mostly we’re talking about credit cards since it’s a revolving credit line that renews and carries over the existing balance.
It’s best to never keep a balance of over 30%. This means if you had a credit limit of $100,000, then you shouldn’t keep an outstanding balance of more than $30,000 to keep your creditors happy.
So if you do have outstanding balances, then your first goal is to push it back down to 30% or less of what your credit limit is, and then of course to pay it off in full.
A nice trick is to move your debt around if you have multiple lines of credit. If one line of credit is over utilised, meaning you have a balance over 30% of your credit limit then you can use another line of credit that is under utilised to push it back down.
You’ll still be in debt, but your credit score will actually improve because your credit score doesn’t just reflect how much debt your have, but how well you can manage credit. And a person who is smart enough to utilise all lines of credit intellectually is a positive sign for creditors.
Method 3: Start paying on time
Your payment history is one of the single most important influencers to your credit score. The easiest way to improve your credit score is to pay on time.
Even if you missed payments before and it’s already on your record; paying on time now will help offset past bad credit behaviour.
This doesn’t just mean paying your credit card bills or loan payments on time. This also includes your other bills, such utilities, phone, internet, rent etc. Your credit report does not only look at your bank loans but also your other financial responsibilities.
Any type of recurring bill should be paid on time, in full to avoid negative points on your score.
Method 4: Do not cancel or close old cards.
Cancelling credit cards you no longer use is one of the most common financial tips people get if they are struggling to manage their finances. But this is a big mistake.
Every credit card you have is a line of credit and each card limit goes towards your overall credit limit. Having a higher credit limit is a good thing. Although it can be bad to not use your cards regularly, it’s even worse to cancel your cards and thus lower your credit limit.
You’re basically actively giving yourself less credibility because you now can borrow less.
As long as your cards have no annual fees then there’s no harm keeping them around. It’s even better if you can use them every one in awhile. It doesn’t matter how small the transaction is, just using your credit lines is a positive and will help you improve your credit score.
Did you enjoy this post? If you did, please take a moment to use the social media buttons at the bottom to share this with friends, family, colleagues, your neighbour’s cat, anyone with access to the internet 🙂 Thanks!
Other resources to check out:
- Improve your financial literacy by learning these banking terms in less than 10 minutes
- Frugal spending habits to help you pay off debt
- Learning the 3 rules to wealth creation and early retirement
- Find out how my parents retired in their 40’s