7 Quick and Easy Ways to Boost Your Credit Score, According to Financial Experts
Taking these steps could help reduce interest rates on car or home loans, or unlock credit card perks.
Whether you’re looking to buy a home, lease a new car or just want to make sure your credit is at its best, taking proactive steps to boost your credit score can make a big difference. A good credit score can mean a better interest rate, which will save you thousands of dollars over time, and could qualify you for better credit card rewards, lower car insurance rates and more negotiating power with the terms of your loans.
A high credit score can also increase your chances of qualifying for same-as-cash promo deals when buying high-dollar items like a new refrigerator or new mattress. You do need to make sure you properly budget to pay those deals off, but the ability to buy that new air conditioning unit for a low monthly payment with no interest will definitely ease the pain of having to replace it in the first place.
How are credit scores determined?
There are many different kinds of credit scores, which can weigh considerations differently. But for FICO, the most common kind of credit score, there are five main factors that determine your score.
- Payment history (35% of your score): This shows if you pay your bills on time.
- Credit utilization (30%): This is how much of your credit limit you use. Experts recommend aiming for 30% or less.
- Length of credit history (15%): This shows the average age of your credit accounts. Longer credit history is ideal.
- New credit (10%): Applying for a new credit card can ding your score for up to six months, so don't apply for too many new cards at once.
- Credit mix (10%): Your credit score rewards managing multiple types of credit, such as credit cards, car loans and mortgages.
Working on these factors will help improve your credit over time. To make it happen, here are a few simple steps you can take to help boost your credit score with a little discipline and patience.
Keep credit card spending low
How it helps: decreases credit utilization
The fastest way to boost your credit score is to charge less on your credit cards. This decreases what credit agencies call your credit utilization, the percentage of your total credit limit that you use. For example, if you have a $1,000 credit limit and your balance is $500, you have a 50% utilization rate.
Experts recommend keeping your utilization rate to 30% or lower for the best scores. It will help both your budget and your credit!
Request a credit limit increase
How it helps: decreases credit utilization
Another simple and fast way to boost your credit score is to simply request an increase in your overall credit limit. As long as you don’t go out and charge more to the increased limit, this will immediately lower your credit utilization rate and boost your score. For example, if your credit limit increases from $1,000 to $2,000 and your balance is $500, you've decreased your utilization rate from 50% to 25%.
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Automate bill payments to always pay on time
How it helps: improves payment history
If your score is suffering due to late payments, Tania Brown, CFP® and financial coach for women, recommends setting up autopay for your bills and at least your minimum payment due on credit cards.
Many of the aspects of credit scores are time-based, so even if you are on your best credit behavior now, late payments can drag your score down for at least 2 years. Autopay can help avoid that.
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Keep old accounts open
How it helps: increases length of credit history
Paying off a balance is a relief, but think twice about closing the account once it’s at zero. The length of your credit history is based on your oldest account, so closing one that you’ve had for many years can hurt your score.
You don’t have to carry a balance for an open account to help your score; just charge an occasional bill to the account then pay it off right away to keep the account open and current.
Request to be added as an authorized user
How it helps: increases length of credit history
Tania Brown notes, “If your low score is due to no credit, ask a parent to authorize you to use their card.” This automatically gives you a credit history without having to be individually approved for credit.
You’re not required to use the card in order to experience this benefit, so this is a great way for parents with good credit to give their kids a quick boost.
Add your bill payments to your credit report
How it helps: improves payment history
For a non-credit way to increase your score, Brown recommends using services like Experian Boost, which reports on-time payments of your monthly bills. “You should also find out if you can use your rent to help boost your score,” she notes.
Check your score often
How it helps: catches errors and gives real-time feedback
The information on your credit report is what determines your credit score. Make sure you’re checking your full credit report once a year through www.annualcreditreport.com to obtain a free copy of your credit history from each of the three credit bureaus. Address any errors as soon as possible to ensure mistakes aren’t hurting your score.
Most banks also offer the ability to check your credit score for free with no penalty to your score. Checking in monthly can give you real-time feedback about how your credit score is fluctuating based on your financial decisions.
Kelley C. Long, CPA/PFS, CFP® is a financial coach and writer who works with women and couples to remove money as a barrier to following their bliss and living in their values. She’s the host of the Financial Bliss with Kelley Long podcast, narrator of Calm’s popular “Navigating Financial Stress” series and a frequent writer for various personal finance outlets. Follow her on Instagram @financialblisscoach.
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