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We would all have excellent credit scores in a perfect world and never worry about our credit rating. However, sometimes our credit score takes a hit when life happens. If you're looking to improve your credit score in 30 days or less, read on! Here are 15 tips that will help you boost your credit rating and get back on track.
How to Improve Your Credit Score in 30 Days or Less: 15 Tips
What Is A Credit Score?
Credit scores determine your creditworthiness. In other words, it's a way for them to gauge how likely you are to repay your debts. A high credit score means you're a low-risk borrower, which is good news for lenders. On the other hand, a low credit score indicates that you're a high-risk borrower, which means you're less likely to get approved for loans and lines of credit.
Types of Credit Scores
There are two main types of credit scores: FICO scores and VantageScores. FICO scores are the most commonly used by lenders, while VantageScores are becoming more popular.
Your credit score is based on several factors, including your payment history, credit utilization, credit mix, and length of credit history. Let's take a closer look at each of these factors:
Payment History: This is the most critical factor in your credit score. Your payment history includes all of your past and present payments, including late payments, collections, bankruptcies, etc.
Credit Utilization: This is the second most crucial factor in your credit score. Credit utilization is how much of your available credit you're using. For example, if you have a $1000 limit on your credit card and charged $800 to it, your credit utilization would be 80%.
Credit Mix: This is the third most important factor in your credit score. Credit mix refers to your credit types, such as revolving (credit cards) and installment (loans).
Length of Credit History: This is the fourth most important factor in your credit score. Length of credit history is how long you've been using credit. The longer you've been using credit, the better.
How Often is Your Credit Score Updated?
Your credit score is updated every time you make a payment or apply for new credit. If you have a lot of debt and make late payments, your credit score will decrease. On the other hand, your credit score will go up if you pay your debts on time and keep your balances low.
You can check your credit score for free using the Credit Karma and Credit Sesame websites.
Fastest Ways to Improve Your Credit Score
Now that we've answered the question, What is a credit score, and taken a closer look at the factors that go into it, let's talk about how to improve your credit score.
Here are 15 tips that will help you boost your credit rating:
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Pay Off Any Credit Card Debt
One way to do this is to transfer your balance to a low-interest credit card. Transferring your balance will help you save money on interest and pay off your debt faster.
Another option is to consolidate your debt with a personal loan. Personal loans typically have lower interest rates than credit cards, which could be an excellent way to save money on interest and pay off your debt more quickly.
Dispute Any Credit Report Inaccuracies
If you see any inaccuracies on your credit report, dispute them. These can include errors like late payments made on time or accounts that don't belong to you.
You can dispute these inaccuracies by contacting the credit bureau directly. Be sure to include any documentation that supports your claim.
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Use Experian Boost
Experian Boost is a free service that can help you improve your credit score. You need to link your bank account, and Experian will automatically add any positive payment history to your credit report.
Using Experian is an easy way to boost your credit score, and it's completely free.
Become an Authorized User On Someone's Account
If you know someone with good credit, you can become an authorized user on their account. Becoming an authorized user will allow you to piggyback off of their excellent credit and improve your own score.
Just be sure that the account is in good standing before becoming an authorized user. Otherwise, you could end up damaging your credit score.
Request a Higher Limit On Your Credit Cards
If you have good credit, you can request a higher limit on your credit cards. Requesting a higher limit will lower your credit utilization ratio and help improve your score.
Just be sure not to use the extra credit. If you do, you could damage your score instead of improving it.
Pay All Bills on Time
Paying all of your bills on time is one of the best things you can do to improve your credit score. Set up automatic payments if you need to, never miss a payment.
Late payments can negatively impact your score, so it's important to always pay on time.
Use a Secured Credit Card
A secured credit card is a great way to rebuild your credit. You'll need to put down a deposit used as your credit limit with a secured card.
Using a secured credit card can help you improve your score by showing that you can use credit responsibly. Just make all of your payments on time and keep your balance low.
Get Rid of Any Unused Credit Cards
If you have any unused credit cards, it's best to get rid of them. Having too many open lines of credit can hurt your score, so it's essential only to keep the cards you use.
You can close an account by either cutting up the physical card or contacting the issuer and requesting that they close the account for you.
Limit Your Applications for New Credit
Every time you apply for new credit, it will result in a hard inquiry on your report. Too many hard inquiries can hurt your score, so limiting the number of applications you make is essential.
If you're shopping around for a loan or credit card, do all your research within 14 days. Doing your research within this time period will count as a single hard inquiry instead of multiple inquiries.
Keep Your Credit Utilization Low
Your credit utilization ratio is the amount of debt you have compared to your credit limits. It's best to keep this ratio below 30% and ideally below 20%.
To lower your credit utilization ratio, one way is to request a higher limit on your credit cards. Another way is to pay down your debt, so you have less of a balance to report.
Both of these options can help improve your credit score.
Monitor Your Credit Report Regularly
You should check your credit report regularly for any inaccuracies or changes. You can get a free copy of your report from each of the three major credit bureaus once per year.
You can also sign up for a service like Experian Score Watch, which will alert you whenever there's a change to your report. Signing up for this service can help you catch any mistakes and dispute them right away.
Improving your credit score doesn't have to be complicated. By following the tips above, you can boost your score in just 30 days. And the higher your score is, the more options you'll have when it comes to borrowing money and getting approved for loans.
As a certified credit counselor and syndicated writer at MaxMyMoney, Max has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.