7 Simple Strategies – Forbes Advisor

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Most people decide to improve their credit score when they are preparing to apply for credit or if they are having trouble qualifying for a credit card, loan or lease. In these cases, you want to build your credit as quickly as possible. Although there is no magic solution for bad credit, the solutions can be simple.

Use these seven strategies to quickly establish a rock-solid credit rating.

1. Pay all your bills on time

On time payment history is the most important factor when building credit. Your payment history, which is one of the factors that make up your FICO score, makes up 35% of your FICO credit score. This means that you should always aim to pay your bills by the due date.

Setting up automatic payments is the easiest way to pay your bills on time. You will connect your bank account to the provider, who will automatically debit your account on or before the due date. Creating automatic payments means you won’t have to worry about missing a payment, as long as you have enough money in your bank account to cover the bill.

If you choose not to use autopay and realize you missed a payment, contact the lender or bill provider and fix it as soon as possible. Only late payments over 30 days are reported to the credit bureaus. The later the payment, the more it will impact your score.

2. Get a secure credit card

A secure credit card is designed to help borrowers build their credit.

When you sign up for a secured card, the provider will require a cash deposit to serve as security and act as a credit limit. For example, if you deposit $200, you will have a credit limit of $200. If you don’t pay your credit card bill, the card company may take the deposit.

You can use a secure card at the same in-store and online retailers where you would use a traditional credit card. However, your credit limit will generally be lower.

With a smaller limit, you should only use a secured card for small purchases well below your credit limit. Indeed, your credit utilization rate, which represents the share of your total available credit that you are using at any given time, is the second most important credit factor. For example, if your current balance is $100 and your credit limit is $200, your utilization rate is 50% ($100/$200).

As a general rule, it’s best to keep your credit utilization ratio below 30%. However, a ratio below 10% will result in an even better score. So if you open a secured credit card, multiply your total limit by 30% and never go over that at any given time. For example, if your limit is $200, don’t use more than $60 at a time ($200 x 30%).

3. Become an authorized user

An authorized user is someone added to an existing credit card account. Authorized users can use the card but will not be responsible for payments. When you become an authorized user, the card history will appear on your credit report. If the primary cardholder made payments on time, your credit score may improve.

4. Pay off any existing debt

To reduce your credit utilization rate quickly and improve your scoreUse the debt avalanche or debt snowball method to repay an existing debt:

  • With the debt avalanche method, you focus on paying off your highest interest rate debt first, followed by the next highest interest rate debt, and so on. However, be sure to make the minimum payments on all other cards in the process to avoid any penalties.
  • the debt snowball method, on the other hand, focuses on paying off your smaller balances first while meeting the minimum payment requirements for your other cards. This method is meant to help you build momentum as you gain a sense of accomplishment by paying off one card after another.

5. Apply for a Credit Builder Loan

A credit builder loan is for borrowers with no credit history who do not want to open a credit card.

To use a builder’s loan, you first decide on the amount and the duration. Instead of receiving the money up front, each month you make a payment to the lender, and they report it to the credit bureaus. When the term is over, you get back the amount you paid, minus any fees.

If you made payments on time, you should have improved your payment history and therefore increased your score.

6. Request a credit limit increase

Paying down your debt isn’t the only way to lower your credit utilization rate. Another strategy is to increase the credit limit on your credit cards while keeping your balance at or below the same amount.

For request a credit limit increase, contact your card provider. They may perform a credit check before approving the limit, which can lower your score by up to five points. Remember not to get greedy with a larger credit limit. If you decide to abuse your new limit, you will defeat the purpose of this strategy.

7. Consider Experian Boost or UltraFICO

When you have no credit history, adding additional accounts can increase your score. You have two options that might help: Experian Boost and UltraFICO:

  • Experian Boost Assesses your utility, streaming, and other accounts and adds one-time payments from those accounts to your Experian credit report. If a lender or card company uses another credit bureau, they won’t see any of your Experian Boost accounts.
  • UltraFICO is a FICO program that adds information about your bank account balances, cash flows, and bank transactions. However, not all lenders use or accept the UltraFICO score.

Increase your FICO® score instantly with Experian Boost™

Experian can help you increase your FICO® score based on paying bills like your phone, utilities, and popular streaming services. Results may vary. See website for more details.

Frequently Asked Questions (FAQ)

How to increase my credit rating by 100 points in a month?

Raising your credit score by 100 points in a single month is next to impossible, especially if you’re starting from scratch. However, if you have a significant error on your credit report, such as a default that never happened or a credit card that doesn’t belong to you, deleting it can significantly increase your score.

How long does it take to build a credit score of 700?

It can take several months to increase your credit score, and even longer if you have bankruptcies, defaults, late payments, or liens on your report. The exact time frame to build a credit score of 700 depends on the person.

What’s the fastest way to build your credit?

The fastest way to build a credit score from scratch is to open a credit card, keep your credit utilization rate below 10%, and pay it off every month.

If you already have a credit card, aim for less than 10% credit utilization and never miss a payment. If you have a loan, like a car loan or a student loan, make payments on time and avoid opening new loans. It will take several more months to build your credit, so follow the steps above and be patient.


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