8 Expert Tips for How to Improve Credit Score

Think your credit score is just a boring number that doesn’t matter? Think again – it could be the key to unlocking a life-changing loan or moving into your dream home.

Learning how to increase credit score is crucial because your score affects your ability to get a loan, rent an apartment, buy a house, and secure a job. This Tower Loan article covers how to boost a credit score with practical strategies, reasonable timelines, and debunking myths.

What Impacts Your Credit Score?

Your FICO score impacts most lending decisions and ranges from 300 to 850. VantageScore is a newer scoring model and FICO alternative that weighs financial factors a bit differently.

Here are the main factors to focus on as you learn how to build your credit:

• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit inquiries (10%)

A Step-by-Step Guide for How to Boost Credit Score

Follow these eight steps if you’re searching for how to raise a credit score in the most financially responsible way.

1. Make All Payments On Time

Payment history is the most influential factor in your credit score, so never miss a payment or make one late. You can do this by setting up autopay, using calendar reminders, and trying tools like Experian Boost for utilities and rent.

2. Lower Your Credit Utilization

Your credit utilization should ideally be less than 10% but at least under 30%. Keep it low by paying bills multiple times per month and requesting credit limit increases without spending more. Another strategy is to take out a personal loan to consolidate credit card debt.

3. Leave Old Accounts Open

Even if you no longer use old accounts, leave them open because they extend the length of your credit history. You can keep old cards active with small, recurring payments or downgrade cards with recurring fees instead of canceling them.

4. Limit Hard Credit Inquiries

Another step for how to improve credit score is to limit hard inquiries, which occur when a lender accesses your credit related to a specific credit application. You can do this by spacing out applications, prequalifying for loans when possible, and shopping for auto and mortgage loans within a 14-45-day window.

5. Responsibly Diversify Your Credit Mix

Credit scores are positively impacted by having a mix of revolving and installment credit. To diversify your credit mix, you can responsibly take out a credit-builder loan, secured credit card, or retail financing.

6. Become an Authorized User on a Good Account

You can become a user on someone else’s account as a strategy for how to improve your credit score. Ask someone you trust with a positive payment history and low credit utilization rate to add you to their credit card account. Just beware that doing so will make you inherit their negative history.

7. Dispute Credit Report Inaccuracies

Part of how to increase your credit score involves monitoring your credit report. Get your free Experian, TransUnion, and Equifax reports through AnnualCreditReport.com. Valid disputes are usually resolved within 30 days.

8. Regularly Monitor Your Credit

As you monitor your credit, look for signs of identity theft, such as details you don’t recognize. In addition to the three reports mentioned above, you can try Credit Karma, a free platform that provides credit reports. Credit score apps, including the Experian app, myFICO, Mint, and CreditWise by Capital One, are available.

How to Raise Your Credit Score ASAP

Need some tips for how to increase your credit score quickly?

• Pay credit cards early, before the statement date
• Use rent or utility reporting services
• Earn more income to pay off debt faster
• Don’t co-sign for someone else while trying to build your own credit

How Long Does It Take to Build Credit?

Although you want to learn how to increase your credit score quickly, know that patience and consistency over the long term matter in the eyes of financial institutions that determine your credit score.

Here’s a realistic timeline for building credit:

• Short-term improvements: 30-60 days
• Medium-term improvements: 3-6 months
• Long-term improvements: 6-12+ months

Debunking Common Credit Score Myths

Many common myths surround the question of how to boost credit score. Here are some examples.

• MYTH: Checking your credit score hurts it.
  • FALSE – Checking your score is only a soft inquiry, which has no impact.
• MYTH: Closing old accounts improves your credit score.
  • FALSE – Older accounts demonstrate a more established history, which improves your score.
• MYTH: All debt is bad.
  • FALSE – Debt can be a useful financial tool to build income and long-term value.

Frequently Asked Questions

Tower Loan is here to help you learn how to build your credit. Below are some common questions people ask, but we also welcome you to visit a branch near you to learn more or apply for a credit-builder loan.

Can I Boost My Credit Overnight?

No, even small improvements typically take a month or more, even when following strategies for how to increase your credit score quickly.  

What Credit Score Do I Need to Get a Mortgage?

The score needed for a mortgage depends on the type of loan and the lender’s requirements. You’ll benefit from a score of 740 or higher for the best rates on a conventional loan. You may get approved with a lower score but have higher interest rates.

What’s a “Good” Credit Score?

A “good” credit score is generally between 670 and 739 on a scale of 300 to 850.

Is It Better to Pay Off Debt or Make Minimum Payments?

Paying off debt is generally the best way to save on interest fees. Living debt-free can also improve your credit score while offering financial security and peace of mind.