Updated January 4, 2021 . AmFam Team
Would you be surprised to learn that you can build credit today quicker than ever before? By becoming an authorized user on another’s existing credit card, you can begin to take control of your credit rating. And you can also leverage the payments you’re making monthly — from rent to utility bills — by getting those details to credit reporting agencies.
To help you build your credit history, we’ll explore how to increase credit scores by opening a line of credit with a secured credit card or a secured loan. So, on to the big question: how can you improve your credit score, quickly? We’ve got 14 tips on how to raise your credit score fast that are sure to help.
The answer depends on the conditions of your debt and overall payment history. If your FICO score took a hit when you opened a new credit card or maxed one out — that can usually be resolved within a few months.
But if you’ve made a habit of missing payments, you may be looking at a couple of years of making steady payments to get your credit score back on track. No matter where you’re at on that scale, there’s a lot you can do to improve your credit score quickly.
You've got some great tools available to boost your credit score: you’ll first need to get a copy of your credit report and verify it’s accurate. If errors exist and are left unchecked, credit bureaus may ding you with a lower score than you deserve. Here are several key suggestions to help you improve your credit score:
To get your free annual credit report, you’ll need to contact each of the credit reporting agencies separately and request it:
Review each of these reports thoroughly, verifying the following details are correct on each:
If you find any issues, be sure and contact the credit reporting agency immediately and work with them to file a dispute. If there are charges you don’t recognize, it may be necessary to place a freeze or block on your social security number.
When you’ve got ID Theft coverage with American Family Insurance, we’ll help you file your fraud claim and our team will help you manage the issue, which can be quite time-consuming and costly.
Paying your rent and utility bills on time is the #1 step when it comes to how to improve your credit score. Setting up automatic payments from your bank account can help you stay on schedule.
Ask a friend or family member to contact their credit card issuer and have you registered as an authorized user. The card issuer will need your personally identifiable information in order to process the request. And the payoff can be big: you may find yourself with a credit score boost in a few months’ time.
Paying off student loans and other debt can help raise your credit score. One smart way to start hacking away at that debt is to make smaller, bi-weekly credit card payments vs. one monthly payment.
Scheduling automated payments can help you pay down that credit card debt more quickly, which is one of the fastest ways you can boost your scores. And if you’ve got any accounts on your credit report that are in collections, lenders may settle for a lesser amount if you approach them with a plan to pay the debt back.
Try registering with Rental Kharma (Opens in a new tab) to get your rent and utilities reported to the credit reporting agencies. For a small fee, they’ll process landlord and utility payment data (up to six months’ historic data, too) and inform the credit reporting bureaus each month.
Another option is to register with Experian Boost (Opens in a new tab) which is a free service for those with an Experian account. According to Forbes, 86 percent of consumers with a thin credit file who used Experian Boost experienced an instant FICO 8 score increase — up to 19 points.
Another great first step for establishing credit is to get a secured credit-builder loan. It works like this: you’ll deposit a few hundred dollars into a secured loan savings account, which acts as collateral on a loan from the lender.
You’ll then make scheduled payments — which are reported to the credit bureaus — until the amount you owe is paid back. The deposit is then released back to you after the account is closed. Secured loan groups like Kikoff (Opens in a new tab) and Self (Opens in a new tab) may be worth considering. After you’ve proven that you can pay back the loan, your FICO score may improve and credit card issuers can be quick to offer credit.
Getting a secured credit card (Opens in a new tab) is another great way to start building your credit from scratch. You’ll typically deposit around $200 cash into the secured account or pay an annual fee. Each month, you’ll be responsible for making timely payments. After the account is closed in good standing, you’ll get that security deposit back and your credit rating may go up.
Do your best to keep your balances way below your credit card limit. The amount you owe compared to your credit limit (or your credit utilization ratio) typically has a big impact on your credit score. If your monthly credit card spending is usually close to your credit limit, it can negatively affect your score — even if you pay off your credit card bills on time. If you can get your spending down to 20% of your limit, that’s a great formula for a real credit rating boost.
Although you’ll save on interest payments, moving credit card debt from one account to another does little to improve your credit score rating. Instead, work hard on paying down the amount you owe each month by saving money where you can.
One key move you can make is to request a higher limit on your current card. If you’re looking for ideas on how to increase credit scores, this is a good one.
The idea is to up the ceiling on purchase limit, but spend less each month so that credit utilization ratio improves. Note that this may result in a "hard inquiry" of your credit report, which could result in a brief drop of your credit rating. You may find you’re on the way to your best credit score ever!
While you might think having fewer credit cards would help you improve your credit score, that may not be the case. In fact, closing credit cards can ding your credit score, because closing a card means losing its limit, which effects your overall credit utilization ratio.
By grouping your mortgage or credit card applications into the same two-week window, credit reporting bureaus will usually view them as a singular inquiry. But if you apply for a mortgage and five months later apply for a credit card, you may find a drop in your rating due to those multiple inquiries. Those small dings add up — and eventually, they can affect your interest rates.
These tips can get you on the right track to making payments on time, which can help you plan for your future and work towards your dreams! While you’re taking on these tasks, remember to reach out to your American Family Insurance agent (Opens in a new tab) and request a quote on identity theft coverage. You’ll have more peace of mind knowing you’ll have the right support when you need it most.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.