How to improve your credit score quickly

Quick ways to improve your credit score

Improve credit score for new credit

If you are applying for a mortgage, a personal loan or financing a car loan, a good credit score will help lower your interest rate, reduce payments and save you money.

Credit scoring is still an integral part of the decision making process for a majority of lenders because it is designed to predict how likely you are to repay a debt, a loan or credit card balance. A lower credit score means:

  • You may not be eligible for a loan with some lenders, and
  • You are paying a higher interest rate and extra payments every month (money that you can save or spend elsewhere).

You can save money by improving your score before you apply for loans.

What is in a credit score?

Before making changes to improve your credit score, we must first try to understand how credit scores are used by and built for lenders.

The average American FICO credit score is 695, which is considered “fair” (in a range of 300 to 850). Within that range, there are different categories or ratings, from poor (or bad) to excellent. The higher your score, the better your rating. At the same time, Experian reported the average American VantageScore to be 669 in 2015.

As an example, FICO scores (from Experian) have the following ratings:

  • Excellent Credit: 800+
  • Very Good Credit: 740 to 799
  • Good Credit: 670 to 739
  • Fair Credit: 580 to 669
  • Poor Credit: Below 579

While FICO is the most commonly used scoring system, there are different FICO score systems for different industries (auto loans, credit cards, mortgages etc.). There are also custom credit scores developed for use by different lenders based on how the lenders consider credit information and how much risk they want to take.

You have access to your generic credit score but not the custom score (unless you apply for a loan with a lender who uses custom scores and reports your score to you). While there should generally not be a significant rating difference between generic and custom scores, it all depends on individual circumstances and what factors the lenders consider most important to them.

As such, it is important to consider what your generic custom score means for your credit rating (the score is just a numeric measure). This article is intended to help you improve your overall credit rating.

How your credit score impacts the interest rate you pay?

The difference in the interest rate paid by people in different categories, for the same loan, can be significant. As an example, the difference in interest rate for personal loans between excellent and poor credit is more than 20%, as analyzed by LendingTree (based on its credit rating range). That difference is nearly $120 per month for every $10,000 borrowed on a four year loan and nearly $6,000 over life of the loan.

Interest rates by credit score
Source: LendingTree

While the difference may be relatively lower for collateralized loans like mortgages, it is nevertheless significant over the life of the loan.

Improve your score with these quick measures

Fortunately, you can take some simple steps to improve your credit score quickly. While expecting a significant jump in your credit score in the short term is unrealistic, there are definitely some tips (or tricks) you can use to improve / increase your credit score almost instantly. I personally have used these tricks to improve my score within a month by more than 40 points (from 690 to 733) just before I applied for a good deal on my car lease. We have outlined some of these methods below.

You can improve your score quickly too if you have the means. Results may vary for different people.

First, make sure you give yourself a few weeks (ideally a month) before you apply for new credit allowing your efforts to flow through the credit reporting system and transform your credit score. Reason? There is a delay in information reporting from your debt holders to the credit reporting agencies and you have to let that play out. In some cases, you can call for an update to be made but it can be a long process and chances of success in accelerating the reporting are not common.

Lets go through these methods.

1. Know your score and monitor your report

Your primary step to enhancing your credit score is to start monitoring your score and report closely. If you don’t monitor your credit score and report, you will not be able to determine what factors are affecting your credit and what issues need to be addressed as priority. It will also help you to confirm when your credit score is updated after you make some quick changes to improve it.

Remember that a credit score is different from a credit report.

  • A credit score is just a three digit numerical value that represents you on a scale. Your credit score is based on your credit report.
  • A credit report is the detail and history of your credit related activity and public records.

While your credit score is important, lenders may also look for anomalies in your detailed credit report before making a decision. For your purposes, a credit score alone will not provide you enough information to make any necessary changes so you should obtain both: your score and your report.

Experts suggest that we should obtain a credit report at least once a year from the major credit agencies but given the advancement in technology and availability of your credit information, you can monitor your credit on an ongoing basis and for free.

What credit scores and credit reports should I monitor?

In the 1980s, the Fair Isaac Corporation (FICO) set up the first general purpose credit scoring system. It is the most widely adopted and recognized scoring system. Another credit scoring system, VantageScore, was developed jointly by the three major credit bureaus (Experian, Equifax, TransUnion) in 2006. Scores can vary across providers as they apply different formulas to your credit information but your score placement within their score range should not be significantly different unless there is incorrect or missing information.

As we mention above, there is diversity among businesses in the scoring system or credit report they use to assess your credibility as a customer. Furthermore, a lender may or may not get your score from each agency and they may or may not report your debt or credit check to all agencies at the same time so it is important to make sure you monitor score from different providers. It is also common to see inconsistencies in credit reports across agencies so you should aim to review reports from different providers consistently.

What tools can I use for credit monitoring?

  • Credit Card Provider

Providers like Discover and American Express offer free FICO score monitoring if you have a credit card with them (depending on the card). If they ask you to pay for it, consider other available tools (mentioned below).

  • Free services

Credit Karma, Credit Sesame and myBankRate offer free basic membership with good features but they may use your information to provide you with customized offers for certain products and services (which is better than them selling your information to others directly). Be sure you are comfortable with their privacy policies and how they work. (As we care about our and your privacy, we generally suggest avoiding companies who “sell” your information to others).

Whether you want to upgrade to a paid version is your choice but the basic free version is a good place to start even if it only updates your scores once a week or month. These services also send you alerts when your credit score or report changes. Bear in mind, however, that the scores you receive may not necessarily be FICO scores that are used by many lenders but they will be a good proxy for direction of your FICO score. Also, the tools may not report scores for all credit agencies so you may have to sign up for a couple different services to ensure you have scores from all agencies.

I personally use all these tools myself. You can also pull a free credit report (annually) from In fact, if you want to start with this free report, that is ok.

  • Other paid tools

The credit agencies have their own subscription based services but they tend to be expensive. myFICO provides FICO score reporting. Experian, Equifax and Transunion have their own subscription fees or one-time report fees. I used to pay for these services before the free services came along.

2. Consider why your credit score is low

If you signed up for monitoring, you can review the factors that are working against you.

There are some factors that you cannot change on your report (read here to know how the factors are generally weighted). But first, let’s focus on the most common factors that lower your score but can be addressed in short order to improve your score:

  • Your total credit utilization ratio is too high. Credit utilization ratio is measured as total debt you owe out of total credit available to you. For example, if you have $2,000 debt on a credit card with a limit of $2,500, your credit utilization ratio is 75%.

  • One or more of your cards is maxed out. Even if your total credit utilization ratio is low, if you have maxed out on one credit card while keeping the other barely used, that may also create problems for your credit scoring. For example: You have two credit cards with $2,500 limit each. One credit card with zero balance and another with $2,500. Your overall debt limit is 50% ($2,500 you owe divided by $5,000 total) but you are maxed out on one.

  • Inaccurate or stale reporting of your payment activity. While not as common, it does happen. Lack of positive information or inaccurate credit history may be keeping your score lower than it otherwise should be. Things to look out for include:
    • Your personal information is not accurate.
    • All of your credit accounts are not getting reported or are not up to date, particularly if you have made all payments on time.
    • There are accounts listed that do not belong to you.
    • Payment history is incorrect.
    • Your identity was stolen.
    • Any negative information older than your state’s statute of limitation (e.g., 7 years) is still on your report.
  • You have some accounts with small balances. Some suggest that such a usage can count against you although we believe the impact may be minimal. For example, you have five credit cards where three of them have less than $200 in charges and the other two have $1,000 each. 

If you have questions on any of the factors, feel free to ask in the comments section below.

3. Make some quick changes to improve your credit score

For the factors listed above, there are certain things you can possibly do, particularly:

  • Pay down your credit card debt
  • Request an increase in your credit limit
  • Do not close your accounts
  • Correct any errors on your credit report(s)
  • Continue to have some activity on your credit accounts

While there are other factors that can impact your credit score, the above items have an immediate impact. Making changes is part science and rest art so pay careful attention and if you have any questions on these methods, please ask in the comments section.

Pay down your credit card debt (if you can)

Reducing your debt on credit cards will increase the credit available to you and therefore your total credit utilization ratio. Having a credit utilization below 30% (i.e., more than 70% available credit) can improve your score, sometimes significantly.

If you have many credit cards, the most effective way of reducing your debt is to focus on paying off the cards with the highest interest rate first. This will save you the most money as you are getting rid of the most costly debt. This method is often referred to as the “avalanche method”.

Instead, if you choose to pay off your smallest balance credit cards first, it will benefit you psychologically and help build a momentum to pay off the rest. This method is referred to as the “snowball method”.

If you ask us, we think the avalanche method is better in helping you reduce your debt burden because paying down your higher balance and utilized credit cards should have a bigger impact than paying off your smaller balance and utilized credit card debt. But… everyone is different so choose a method that will help you gain the most financially and psychologically while making sure you can get as low down the credit utilization scale as possible.

Note that having zero debt on your credit card (i.e., zero utilization and 100% available credit) is a good thing for you but in the long run, it doesn’t give much information or history to the credit agencies to determine how good you are with managing credit.

Increase your credit limit

If your credit card company hasn’t increased your limit recently, you can call them and ask for an increase but only if you know you are certain you are not going to use it (we don’t want you to take on more debt).

You may be eligible for a higher credit limit if you have a good credit history with them. You first must ask your credit card company whether they are going to perform a hard inquiry on your report. Say “no” if they do because an inquiry on your credit will hurt your score in the short term instead of improving it for your upcoming loan application. If it is not a hard inquiry, go for it.

Also remember that your credit card company will ask you the amount of credit you want to increase your limit to (since it is your credit). Do your homework prior to calling them – determine what will get you to below 30% utilization while at the same time isn’t absurdly high. If you ask for a lower limit, you may lose out on what the credit card company can offer but won’t say. If you ask for a much higher limit, it may call into question your intention and raise an alarm. Most likely, if you are eligible and ask for a higher limit, they will just tell you they can’t approve that high of a limit but can approve a lower amount than your request. That is where the “art” comes in play.

Whatever you decide, there is no need to be afraid or nervous as it is a fairly basic request. You are not the only one asking for a limit increase from your credit card company.

Furthermore, having more credit available to you on your credit cards proves that you have the discipline to not use the available limit and may get you more points with the lenders.

That said, I should say that we personally would consider this a last resort because the more credit you have available, the higher the risk of using it or maxing out on your credit cards. It is easy to be reckless with your credit but difficult to pay it off. However, it is also one of the most effective ways to improve your credit utilization and therefore your credit score. So be wise with this decision.

Don’t close your accounts, especially credit cards

Closing your accounts will harm your score because of three reasons:

  1. If you close an old account, you will reduce the average age of accounts, which can be bad for your credit score.
  2. If you close a credit card, you will decrease your total credit availability and increase your total credit utilization, which is bad for your credit score.
  3. If you close an account, you may be reducing your credit accounts mix, which again is bad for your credit score.

We understand that the satisfaction of paying off debt is not complete until you close the account. But it will be wise to cut the credit card into pieces or hide the card and not use it (instead of closing the account with the company).

Correct the errors

Any discrepancies in data or incorrect information such as a missed payment or old address should be on the priority list to be corrected. Call the credit reporting agency and raise a ‘dispute’ which should be a straightforward process. Usually they will investigate but may need you to take some corrective action directly.

If you have any debt that is not being reported to one agency or another, you should have that corrected by informing your lender. The more good history your credit reporting agency has, the better will be your score.

Make sure you have some ongoing activity on your credit cards

While credit scoring has advanced significantly in the last decade, it still cannot and does not distinguish between a wealthy individual who can pay off debt within a week’s notice and a not-so-wealthy individual who may need months or years to pay off debt. In fact, it is possible for the wealthy individual to have a lower credit score (than the not-so-wealthy) just because he/she does not have much credit card activity and therefore less history for the credit agencies to evaluate. So keeping your credit functioning is very important in making sure your credit score is healthy beyond the short term.

I personally have a recurring small bill payment for a TV subscription set up on one of my old credit cards to keep the card and my credit active.

How soon will the credit report update?

Theoretically, the first change in your report can occur as early as one week. But that is rare. The timing is impacted by what your creditors report and when they report it:

The What: “As of” reporting date

Lenders may have different policies on the date they select as the “information as of” date. For example, while majority of companies report your balances as of your last statement date, some companies may be reporting previous month end balances or balance upon last payment. There should be enough information on the credit report for you to determine what date is being reported. If there isn’t, you can determine it yourself by comparing your credit report with the monthly statement from the creditor.

The When: Reporting schedule of your creditors

The credit reporting agencies can only report credit information when they receive it from the lenders. Each lender has a different reporting schedule. Most companies are quick to report after the statement date (it is true for the creditors on my credit report). However, lags of 1-2 months are not uncommon.

When you pull your credit report, mark the date and compare it to the date of last update from the creditor. The difference in those dates is the maximum number of days it will take for your next update. For example, if your report is pulled on April 15 and your last update for your credit card is from March 15, you know that the information will be updated in less than 30 days.

What happens next?

If you are able to make all or any of the above changes to your personal credit, you will start seeing improvements in your credit score with each passing month. As I mentioned above, my credit score improved by more than 40 points within a month by making some of the changes above. These are simple yet effective tips to improve your credit score if you have the means. 

We really hope that you are able to benefit from these tips, make the necessary changes and improve your finances. These tips will also help you pay down your debt and that is a great benefit in itself. We really wish the best for you and hope we made a difference. Do let us know if this helped you in any way as it will also encourage others.

If we have missed anything or if you have any other tips, please share your thoughts in the comments below and help others in getting most out of their credit.


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