How to Raise Your Credit Score: Step-by-Step Guide

Whether you’ve been in the game for a while or have just started on your credit journey, there is always a little something you can do to push your credit score a couple points further. Check out our guide to find out whether you can look your credit score in the eye and honestly say you did your best.

Before we begin to learn how to raise credit score, there is a short disclaimer. Your credit score is pretty good at telling how responsible you are with your credit. There is no way to “hack” it. So, if you want an excellent credit score, you’d have to start being an excellent credit user. Until that happens, you can use the tips below to give yourself a couple of short bursts of credit score growth.

1. Dispute credit report errors

It sounds like a long shot, but in reality one in five Americans has incorrect information on their credit report. It could be just a typo or it could be something that shaves a couple dozen points off your score. Therefore, you should probably request some free copies of your credit report as described further in the article and check them for errors. Things to look for are negative items that should be expired, unpaid debts that should be marked as paid, and active accounts that should be marked as closed. Got something? Follow bureau guidelines for disputing report errors. Any disputes should be resolved within 45 days and, if the error is corrected, your credit score adjustment will follow shortly.


2. Catch up on your payments

Once your credit payments are over 30 days late, they show up on your credit report and stay there for the next 7 years. As a result, your credit score drops immediately, and the more payments you miss, the worse it gets. The best thing to do at this point is to catch up on your payments and stay current at all times. The negative effect will slowly wear off, restoring your score month by month, until it’s back to normal.


3. Keep your utilization low

Utilization rate is how much credit you use compared to your total credit limit. It is widely advised to keep utilization under 30%, but there is no magic number that’s guaranteed to work. In fact, people with excellent credit scores tend to have utilization rates of 10% or less, so, as a rule, the lower the better. If your utilization rate is high, then pay the balance down and keep it there. Alternatively, you can try to increase your credit limit so that your balance takes up a lesser share of your limit.


4. Increase available credit limit

Your credit limit could be increased in a number of ways. The easiest one is to contact your credit card company and request a credit limit increase. It might or might not work, but it’s easy to try and it costs nothing. The other way is to open a new credit card, thus increasing the compounded credit limit across your cards. Opening a new card might have a short-term negative effect on your credit score, but it will be gone within a month or two and you’ll be left with a net credit score gain from a higher credit limit. However, it’s not advised to go around opening multiple new cards – the negative effect might snowball and stick around for longer.


5. Mind the payment dates

First of all, it’s a common misconception that the bank reports to the credit bureau on the billing date. In reality, the billing date and the report date are two separate events and may be weeks apart. It’s important to know the date your bank reports to the credit bureau so that you have a favorable utilization rate on that day. Otherwise, you might be paying your balance in full on the billing date while still showing a high utilization rate on the report date.


6. Get a balance transfer card

Balance transfer cards allow you to transfer balances from other cards. More importantly, transfer cards do not charge any interest on the transferred balances for the first 15 to 20 months, depending on the offer. This creates a great opportunity to tackle your credit card debt and possibly even erase it completely. It goes without saying that the less debt revolves on your credit cards, the better it is for your credit score.


7. Get an installment loan

Having several types of credit is good for your credit score. The two main types of credit are a credit card debt and an installment loan. If you don’t have an installment loan already, then you might apply for a personal loan and use it to pay down your credit card balances. As a result, you’ll diversify your credit and your credit card utilization will go down. Two birds with one stone.


8. Try credit counseling

If, for any reason, you find it hard to either come up with a strategy to raise your credit score or have a strategy but can’t make it stick, there is always the option of credit counseling. The service is provided by specialized non-profit agencies, and their goal is to help people who struggle with debt. They charge a monthly fee of up to $30 per account, but the service is well worth it for someone whose own effort is not enough. Credit counseling agencies will be helping you with your debt, rather than specifically your credit score, but, when one improves, so does the other.

Find a way to keep track of your credit score

Monitoring your credit score is essential to your effort to improve it. Sometimes you can be doing all the right things, but your score won’t budge because something else entirely is holding it back. If you manage to catch and eliminate these issues early on, you’ll save yourself a lot of time, effort, and frustration. The best (and perhaps the only) way to do that is to get routine updates of your credit score and see whether it matches your expectations.

Unlike in the olden days, personal credit scores are now available on every corner. Most credit cards and other financial products offer some variety of a credit score for free. We say “variety” because credit scores come in all shades and colors, and there is no one true credit score to go by. Let’s see what’s what and which score tracking setup is the best choice for you.

Free credit score from a credit card

Credit card companies track your credit score to keep tabs on how good of a client you are. Most of them have been generous enough to share these scores with their clients. If you do have a credit card that offers a free credit score, then you can access it by logging into your account. You can also see it on your monthly statement. Some credit card companies even go as far as disclose key factors affecting your score and send you notifications when it changes. See the table below for some of the most popular credit card companies and what kind of credit scores they provide.

BANK

MODEL

BUREAU

EXTRAS

SUGGESTED  CARD

American Express

FICO

Experian

Key factors

Amex EveryDay® Credit Card

Bank of America

FICO

TransUnion

Key factors

BankAmericard Cash Rewards™ Credit Card

Capital One

VantageScore

TransUnion

Key factors
Simulator

Capital One® Quicksilver® Cash Rewards Credit Card

Chase Bank

VantageScore

TransUnion

Key factors
Simulator

Chase Freedom®

Discover

FICO

Experian

Key factors

Discover it® Card

The advantage of tracking your credit score through a credit card is that it’s free and it’s consistent. You get a clear picture of change over time. The disadvantage is that all you see, in most cases, is just a number and a few factors, but no full picture of what goes into your score. For an in-depth look into your credit score, we recommend that you order a free credit report from a credit bureau.

Free credit report from a credit bureau

Every twelve months, you are entitled to one free credit report from each of the three credit bureaus. Regardless of which credit bureau you choose, all reports are ordered through annualcreditreport.com. You can also call 1-877-322-8228 or mail the request. There is no other source of free credit reports.

It’s up to you whether you want to order a report from all three agencies at once or space them out. In fact, many resources advise spacing reports out, ordering a different one every four months. We suggest ordering all three at once. While reports are mostly similar, not all creditors report to all three bureaus. Consequently, there is a chance no single report will give you a complete picture of your credit performance. That’s why we think it’s better to have a complete picture once a year rather than part of the picture three times a year.

Keep in mind that a credit report does not contain a credit score and provides no analysis of contributing factors. It’s main usefulness is that it contains full credit information. What you can do is read the report and find everything that makes a positive or a negative contribution to your score. In case you are not sure what to look for, check out our article about what goes into a credit score.

Just in case you want to obsess over your credit information, there is a way to do just that. All three credit bureaus offer continuous paid access to your credit reports, credit scores, and a few analytical tools to make sense of your credit performance. Similar service is offered by FICO as well. All such services are subscription-based, and there is a slight variation in the quality of provided information. See the table below for details.

 

FICO 1B

FICO 3B

EQUIFAX

EXPERIAN

TRANSUNION

Report from

Any 1 bureau

All 3 bureaus

Equifax

All 3 bureaus

TransUnion

Score model

FICO

FICO

Equifax

FICO

VantageScore

Analytics

Price/month

$19.95

$29.95

$15.95

$24.99

$19.95

While it would be great to have continuous access to all of your credit information, the prices are prohibitive. Even the cheapest subscription comes out at $200 per year. We believe it’s too expensive for what you get, but we felt obliged to give you the full range of available options.

The bottom line

Your credit score is a reflection of your credit behavior. Most of the “quick” ways we’ve provided will give you a one-time push of a dozen or more points, but the only sustainable way to grow your score is to get better at managing your finances. While you are working on that last part, it wouldn’t hurt to pick a way to track your score and see how much of a boost you can get from our advice. Good luck!

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