There is no magic bullet to repairing your credit score. It often takes a lot of hard work and a long time to repair years of damage to your credit score. There is no silver bullet answer that will raise your credit score hundreds of points overnight.
But, there are a few small changes that you can make that can increase your credit score in a very short amount of time. If you are going to be buying a house or even taking out a loan on a new car, increasing your credit score a few points can put you in a better category in your lender’s eyes. This often results in a lower interest rate.
It is important to remember that your credit score is a computer algorithm. The three credit bureaus and Fair Isaac, the makers of the popular FICO credit score, all have proprietary formulas that they use to determine your credit score. Here are five ways that you can raise your credit score a few points in a very short amount of time.
Five Ways To Increase Your Credit Score Fast
1. Correct Credit Report Inaccuracies
A recent report from the Federal Trade Commission recently found that over 40 million Americans have at least one mistake on their credit report. These mistakes, of course, have a direct impact on your credit score. You should get a copy of each of your three credit reports annually to look for mistakes. Clearing up mistakes can see an increase in your credit score in short order.
2. Dispute Delinquent Accounts
You should contact any lender or collection agencies that say you have a delinquent account. You should ask for written proof that your delinquency is valid. If they cannot show proof that it is a valid claim, they are required by law to send an update to the credit bureaus to correct your credit report.
3. Get Current On Past Due Accounts
One of the biggest impact on your credit score, other than bankruptcies and foreclosures, is having past due credit accounts. Bringing any accounts that you have that are past due and making them current by making payments will result in a very quick bump to your credit score after it is reflected in your credit report.
4. Ask for a Credit Limit Increase
Like I mentioned before, your credit score is a formula, and there are a lot of variables that go into its computation. One variable is the amount of your credit that you are utilizing. So, for example, if you have a credit card with a $10,000 credit limit, and you have a $5,000 balance, your credit utilization is 50%.
Lenders and the credit bureaus consider high credit utilization as a negative indication of your creditworthiness. If your credit limit was to be increased to $15,000 and you still had the same $5,000 in debt in our example, your credit utilization would only be 33% then. An ironic result of asking for a credit limit increase is that you can often see a slight increase in your credit score as a result of a higher credit limit. While I’m not advocating for additional or reckless debt, this is one say to increase your credit score quickly by a few points if you need to use it.
5. Ask Creditor to Delete A Late Item
We all make mistakes. Most of use have been late making a payment to a credit card or a landlord once in our lives. These little late payments can ding your credit score bit by bit as they accumulate. If you have been in good standings with your creditor, you may want to ask your lender to delete a late payment notice with the credit bureaus.
Lenders maintain a constant communication on a monthly basis with the credit bureaus. They can easily change or delete a 30 day late notice that is affecting your credit report and credit score. It may be as simple as a quick phone call asking for them to remove the mark on your credit report with the credit bureaus.
It is not easy to increase your credit score. Large moves in your credit score take a long time, hard work, and often paying off large amounts of your debt. But, it is important to remember that there are a lot of factors that comprise your credit score and go into its formula. There are ways to boost your score a little when you need the help.
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Hank Coleman is a finance writer, financial planner, and self-proclaimed investing junkie. He has a Masters Degree in Finance and a Graduate Certificate in Financial Planning. Be sure to follow him on Twitter @MoneyQandA and on his blog, Money Q&A.