Budgeting basics

How can I improve my credit score?

Adding just a few points to your credit score could improve your rating from “fair” to “good” giving you access to better interest rates and a larger line of credit.

March 15, 2023
 min read
Last updated:
Jan 12
Two women smiling at what the first woman is pointing to on her phone.

The gist: There are actually many ways to improve your credit score, from keeping a low balance to opening a secured card or becoming an authoriszed user on someone else's.

Improving your credit score can seem like a daunting task but it doesn’t need to be. Making progress can be as easy as a few simple steps. In fact, adding points to your score is even easier if it’s already low because small improvements have a relatively large impact.

The key is understanding what credit bureaus want to see when they calculate your score. Focusing on these areas can increase your number fast and bump you into a better credit score range. In some scenarios, you can raise your score in as few as 3 months. 

What is a credit score? 

A credit score is a three-digit number that represents your creditworthiness. The number is based on your historical use of credit. 

In most cases, the score comes from the three major credit bureaus, Equifax, Experian, and TransUnion. When calculating your score they consider factors like:

  • Length of credit history
  • Payment history
  • Types of credit accounts
  • Credit utilization
  • Recent credit inquiries

The most widely used score ranges from 300 to 850 and breaks down like this:

  • Excellent: 800 and above
  • Very good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

With a good score, you can easily access credit cards with large credit limits, lower interest rates, and strong reward programs.

What factors affect how quickly my credit score changes?

The major reporting bureaus base your credit score on several factors. Each of these factors has a different amount of influence over your number.

  1. Payment history: 35%
  2. Credit utilization: 30%
  3. Length of credit history: 15%    
  4. Credit mix: 10%
  5. New credit: 10%

Based on this list it is likely that your score will rise faster the more you focus on the top factors like payment history and credit utilization. 

As mentioned above, the lower your initial score the faster it will rise as you regularly use the card and make on time payments. Boosting a score that is already in the “very good” range is more difficult because you must do even more than what you’re already doing.

The speed at which credit reports update varies. Some businesses send credit report updates on a daily basis. Some do so monthly. Expect any change to take at least a few weeks to appear on your report.

How long does it usually take to see improvements to my credit score?

Credit use is a bit like a relationship. If you’ve made a mistake it will take time to restore it. The bigger the misstep, the longer it will take to get things back to normal. Therefore, the amount of time it takes to see an improvement in your credit score depends on your credit history. 

For example, if your score is low because you’ve maxed out a credit account or recently closed a credit account it might take about 3 months to see a meaningful improvement in your score.

It could take 9 to 18 months to recover from a late mortgage payment, or a missed or defaulted payment. Repairing a score from a major event like a home foreclosure or bankruptcy could take anywhere from 3 to 6 years.

The amount of time it takes to see your score improve also depends on your current number. Data provided by FICO shows that a person with a score of 680 will need about 9 months to recover from the drop in score that comes from a 30-day late payment. However, a person with a score of 780 might need to wait as long as 3 years to recover from the same event.

This difference really comes into focus in the case of a 90-day late payment which requires a recovery period of about 9 months for someone with a 680 score. For the person with a 780 score it could take 7 years to bounce back. That’s a big difference. 

The bottom line: when you have a good score you need to work hard to keep it.

What’s the fastest way to improve my credit score?

Correct credit score mistakes

You are entitled to a free credit report from each of the three major credit bureaus. If you see an error on any of these reports you can contact the bureau and request that it be corrected. 

Watch for errors like an on time payment that is incorrectly noted as late, or an outdated late payment that still appears on the report even though enough time has passed for it to be removed. Finding these mistakes and getting them corrected can boost your score fast.

Become an authorized user

This is a fast way to boost your score. You can request to be named as an authorized user on a friend or family member’s credit card account. Once you’re an authorized user, the account is added to your reports and you benefit from the cardholder’s payment history. 

This strategy only makes sense if that cardholder has made on time payments and has a relatively high credit limit. You don’t need to use the card or even have the card number to benefit from this approach. 

Keep a low balance

You can increase your credit score fast by using only a small portion of the available credit limit. This is a good way to improve the “credit utilization” factor which represents about 30% of your credit score. 

Experian recommends keeping your credit utilization rate below 30%. Benefitting from a low credit utilization rate means keeping a low balance on all of your credit cards, not just one. You can also lower your utilization rate by requesting a higher credit limit. Doing so means that your balance instantly becomes a smaller portion of your limit.

Use a secured card

A secured card can help you improve your credit score because it offers a credit limit equal to a cash security deposit that you make. This deposit stays with the card issuer for as long as you have the account. Importantly, this deposit helps you manage spending by acting as a guardrail. As long as you pay the monthly statement on time you will see your score rise because secured cards share your payment history with the major credit reporting bureaus. Many secured cards have a low or no credit score requirement.

What’s the most effective way to improve my credit score?

The most effective way to improve your credit score is to focus on your payment history and credit utilization which together account for 65% of your score. To do so, aim for a low balance and continue to pay it on time. This will bring your score up in a matter of months.

Also, when paying down the balance on several cards be sure to pay down the cards with the highest interest rate first. This will help reduce interest expenses as you work to bring your score up.

Sources: fico.com

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Ben Taylor

Ben Taylor, MBA is a financial writer with work appearing in Business Insider, Nasdaq, Yahoo Finance, The Motley Fool, and Investopedia. He covers personal finance, and investing to help readers make informed decisions. He is the founder of Financial Content Management, which offers financial writing for sites focused on both retail investors or institutional investors. He lives outside Philadelphia.