I don’t have to tell you your credit score is important. Or — maybe I do? More than half of all Americans don’t know their credit score. Here’s why that’s a problem: Your credit score is used by a host of people — from your bank to your landlord — to judge whether you should be allowed something you want, like, say, a credit card. So the worse your credit score is, the less likely you are to get these things.
- A good auto loan
- A mortgage!
- A higher credit limit
- A lower credit card rate
- A job — that’s right, employers see your credit score.
- A girlfriend. Yep, a study actually found women care more about a good credit score than physical attraction in a partner.
So, yeah, your credit score is important. Today, we’re going to show you five tips to raise your score by 100 points — fast. Check it out.
Video: 5 Ways to Raise Your Credit Score Fast
1. Fix Errors on Your Credit Report
First things first: Pull your credit report. And fix any errors. Studies show one in five Americans have mistakes on their credit reports — that’s an accuracy rate of 80 percent. Even the worst teams in baseball last year had a better fielding percentage than that.
The reason you want to fix these errors pronto is your credit score is based on that report. So visit the credit bureau’s website or write to them with your complaint (and have documentation). It’ll take about 45 days for this fix to appear on your report.
2. Pay Down Your Balance
This is one of the easiest ways to almost immediately raise your credit score.
You’ve probably heard this fancy-shmancy phrase before: credit utilization ratio. It’s very important to the credit bureaus, and it’s about 30 percent of your credit score.
It’s basically the ratio of your credit card debt to your credit card limit. So, if your credit card has a $1,000 limit, and you’ve got a $500 balance, you’ve used 50 percent of your credit.
That’s… not good. You want to be shooting for about 30 percent — or, if you can swing it, 10.
So how do you start paying down that debt? There are a couple methods, but an easy one to remember is the Debt Snowball, championed by personal finance expert Dave Ramsey. We recently talked to his daughter, Rachel Cruze, about using this method to get rid of debt completely.
3. Open a New Line of Credit
Here’s another really easy way to raise your debt-to-credit ratio: Get more credit.
If you’re using $500 of your $1,000 credit card, but then you get another card with another $1,000 limit, you’ve bumped your ratio down to 25 percent. And that’ll shoot your credit score up.
Of course, you don’t want to treat this new credit card as just something else you’re going to max out. And opening too many new accounts could actually hurt your credit score. If you’re scared you’re going to do that, try asking your current credit card issuer to up your limit. Remember, spend smarter, not harder.
Related: VIDEO: Why You Should Switch Banks
4. Keep Old Cards Open
Stop right there! You might think shutting down credit you don’t use that often is helping you, but it’s actually hurting you in two ways. One, it’s making your available credit smaller — remember that tricky credit utilization ratio!
Two, part of your credit score is judged on how long you’ve had credit. Old accounts are good, because they prove you’ve been a bill-paying adult for a while.
5. Add Missing Reports
Remember in school when you actually did your homework, and then the teacher didn’t end up collecting the assignments? And you got mad because you didn’t get credit for doing the right thing?
Credit is like that, too. A lot of companies, like utilities, will only report problems and not good behavior.
That’s OK, because you can ask them (politely — it is, after all, a favor) to report the fact that you’ve been paying them money when they asked you to. It’ll add to your score.