Building a solid credit score can benefit you financially in more ways than one. Not only can a good credit score make getting approved for loans or lines of credit less difficult, it can also help you to secure loans at favorable interest rates. But what do you do when your score isn’t as high as you’d like it to be.
You could pay for credit repair services but there’s a less expensive (and potentially faster) way to make a difference in your score. These simple tips could help raise your score in 90 days or less.
- Start with checking your credit
There’s a lot of confusion about credit scores. For example, you may be wondering what the difference is between a FICO score vs. credit score. (A credit score is a three-digit number that gauges your financial health; a FICO score is a specific type of credit scoring model, developed by the Fair Isaac Corporation.)
Your credit scores — and yes, you have more than one — are based on what’s in your credit report. That includes things like your payment history for your various credit accounts, your debt balances and credit limits, how old your credit accounts are, what kind of credit you’re using and how often you’ve applied for credit.
You can get your free credit report and your free credit score instantly through Credit Sesame. From there, you can look at factors are doing the most good, or the most harm for your score. For example, paying late hurts your score significantly.
- Consider opening a new credit card account
Payment history is the most significant factor in credit score calculations, but your credit utilization is also important. This is the ratio between your total credit limit and your credit balances. Ideally, you should be using 30% or less of your total credit line for the best credit score results.
One way to raise your score practically overnight is to open a new credit card account. Having more available credit can lower your utilization ratio and potentially drive your score up. Just keep in mind that this is only effective if you’re not adding to your debt.
You can also achieve the same effect by raising the limits on your existing credit card accounts. If your accounts are in good standing and your creditors agree, you may want to consider this before opening a new card, since applying for a new account can trim a few points off your score.
- Make use of inactive accounts
If you’ve got older credit card accounts on your credit history, letting them go dormant can backfire. You might not be charging debt on those cards but if you leave them alone for too long, your creditor might close them down for inactivity.
If you have a card you haven’t used in a while, consider making one small purchase and then paying it off. This updates the card’s activity and gives you another month of positive payment history, which could give your score a lift.
Track your progress
Credit scores can change quickly from one month to the next. Remember to check your score and report regularly to see how you’re doing and focus on developing habits — such as paying on time and keeping credit card balances low — that can lead to a stronger score over time.