Whether you’ve made some credit mistakes or you’re a credit newbie, knowing how to improve your credit score fast can come in handy if you plan to borrow money in the near future.
That’s because the higher your credit score, the better your chances are when it comes to getting approved for credit. Plus, you’re more likely to receive a lower interest rate.
Establishing an excellent credit score can take months, if not years. But fortunately, there are a few things you can do now to make big strides toward your goal.
How to improve your credit score fast in 5 steps
There are several ways you can rebuild your credit, but only a few of them can make a big difference in just a few months. Here are the top five ways to put yourself on the fast track to a better credit score.
1. Become an authorized user on someone else’s credit card
When someone adds you as an authorized user on their credit card account, you inherit the entire history of that account. If the primary cardholder has a good payment history, you’ll reap the benefits as soon as the credit card company starts reporting the account on your credit report.
Since becoming an authorized user can make such a big difference, it’s essential that you choose someone who has great credit and will continue to use credit wisely. Getting added to a credit card account with a poor payment history can have an adverse effect on your credit score.
2. Create a positive payment history
A big part of learning how to improve your credit score fast includes knowing what goes into it. For example, the biggest factor in your FICO credit score is your payment history, which accounts for 35 percent of your score.
If you don’t have a payment history yet or you’ve missed some payments in the past, here’s what you need to do:
- Pay off any delinquent accounts you have. The longer they go unpaid, the more damage they cause to your credit.
- Start making your payments on time, every time.
- If you already have a credit card or loan, use that account.
If you don’t have a credit card or loan, however, consider a secured credit card.
- Secured cards require a deposit when you open the account. Your deposit is usually equal to the credit limit you request.
- You generally won’t get approved for a good unsecured credit card with bad or no credit.
- As you pay off the balance on time and in full each month for your secured credit card, you’ll generate a positive payment history, which will make it easier to get approved for a better card in the future.
Here are some other ways to establish a good payment history:
- Apply for a credit-builder loan with a company like Self Lender, which helps you establish credit history with a savings-secured installment loan.
- Sign up with a service like Rental Kharma, which reports your rent payments to the credit bureaus. Just make sure you pay your rent on time to keep that positive payment history going.
3. Stay away from your credit limit
The second-most important factor in your FICO credit score, making up 30 percent of your score, is how much you owe. One major element of that factor is your credit utilization ratio, which is calculated by dividing your credit card balance by its credit limit.
For example, if you have a $4,000 balance on a card with an $8,000 limit, your credit utilization ratio is 50 percent.
$4,000 / $8,000 = 50 percent
Many experts recommend keeping your credit utilization ratio below 30 percent. However, the lower you can get your ratio, the better. In fact, an Experian study showed that consumers with the best credit scores used only 8 percent of their available credit, on average.
Since your credit utilization ratio is calculated monthly, paying down a huge balance can make a big difference quickly.
As you continue to use credit cards to build a positive credit history, keep your balance low. Even a short-term spike can knock points off your credit score.
4. Find and address credit report errors
In some cases, it’s not your fault your credit is in poor shape. Creditors and the three credit bureaus — Experian, Equifax, and TransUnion — can make mistakes in their reporting. Get a free copy of your credit reports from the three credit bureaus by visiting AnnualCreditReport.com.
If you find anything that’s out of line — say, an unauthorized account or late payment reported in error — reach out to the creditor and credit bureau as soon as possible to start the process of getting it fixed.
In some cases, creditors and the credit bureaus require documentation for your claims. If you don’t have the time or know-how to do what they ask, consider using a credit repair company to do the legwork for you.
Once the error has been removed from your credit report, you should see a quick response in your credit score.
5. Get rid of a paid tax lien
If you owe the Internal Revenue Service (IRS) money, it can add what’s called a “tax lien” to your credit report. If left unpaid, it can stay on your credit report for 15 years. Once you pay off the debt, the negative item will remain on your credit report for seven years.
The good news is you can ask the IRS to remove the tax lien from your credit report once you’ve paid it off. As soon as it’s gone, it will no longer factor into your credit score, giving it a boost.
Just how fast are we talking here?
Although it’s important to know how to improve your credit score fast, there’s no overnight solution. It can take a few months for some of these tips to start making a difference, mainly because of the credit reporting process.
Lenders typically report account information to the credit bureaus once a month. And if you’re requesting to have errors removed, it can take a while for the credit bureaus and creditor in question to communicate.
That said, building credit (especially as a beginner) is generally a long-term game. So, anything that can move the needle significantly in a positive direction for your credit score in just a few months is worth taking the time to do.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 5.64%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.28%3||Undergrad & Graduate|
|1.89% – 6.77%4||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 5.61%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.
5 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.16% effective Sep 1, 2020 and may increase after consummation.