You know your credit score is important. After all, lenders use this three-digit number to decide whether to approve you for new loans and lines of credit. That’s a big deal if you need a loan to buy a car, become a homeowner or start a business.
When your credit score falls short of your expectations, fixing it is a priority. The question is how to improve your credit score quickly so that you can move forward with your financial goals. With the right plan, you can begin to see an improvement in your score in just a few months.
1. Know what’s working against you
Your credit score is based on what’s in your credit report. Things like late or missed payments, high credit card balances and numerous inquiries for new credit can all drag your score down. Taking a look at your credit habits can help you understand why your score is low.
2. Get on a payment schedule
Payment history is THE biggest influencer when it comes to your credit score. Even one late payment could knock up to 100 points off your score. If you’ve paid late in the past, you should be focused on paying on time, every time going forward. Set up email or text alerts with your credit cards and loan accounts so you know when they’re due each month. If you want to make absolutely sure you’re never late, schedule automatic payments for all of your bills.
3. Set up balance alerts with your credit cards
Next to payment history, your credit utilization has the next biggest impact on your score. This means how much of your available credit you’re using. If you have balances on one or more of your credit cards, you could make a difference in your score quickly simply by paying them down.
Aiming to use 30% or less of your total credit limit is a good benchmark to follow if you’re hoping to improve your credit score. To keep yourself under the limit, set up balance alerts with your credit cards so you know how much of your credit line you’re using at any given time.
4. Increase your credit limits if possible
As you work on paying down your credit cards, you can improve your credit score in a different way. Asking for a credit limit increase can widen the gap between what you owe and your credit limit. Many credit cards let you request an increase online but if you don’t have a great credit score, you may be better off calling and making your case to a customer service rep.
5. Check your credit regularly
Checking your own credit score won’t hurt you and it can be helpful to see where you’re starting from and what’s working for you or against you over time. You can check your free credit score with Credit Sesame. Your information is updated monthly so you can see what kind of progress you’re making in your credit improvement efforts.