How to Improve My Credit Score Fast: 6 Effective Methods
By Jaden Miller , February 12 2021
Do you find yourself thinking "How to improve my credit score?" The average American is roughly $90,000 in debt. While this isn't necessarily indicative of a bad credit score, it can certainly be a leading cause. Fortunately, there are ways to improve credit score. On the flip side, some people try to avoid borrowing money or using credit cards at all to stay out of debt.
However, this approach can cause an equally problematic scenario - not enough credit. This leaves consumers asking, "How can I improve my credit score?" We're here to help. Keep reading for our top six tips on how to improve credit score and fast!
1. Decrease Your Debt To Income Ratio
One of the biggest factors that can work against your credit score is a high debt to income ratio. Typically, a high ratio is considered anything more than 36%. For reference, if you make $4,000 a month and are paying more than $1,800 in monthly debt payments, you're credit score will suffer. If you're asking, "How can I improve my credit score?" you should also be asking how to lower your debt to income ratio.
You have two options - you can either pay down your debt or earn more money.
Both options are easier than you might think. For example, to earn more money for your records or to start paying down debt, consider these various side hustles:
- Donate blood plasma a few times a month
- Sell unwanted items
- Rent out your spare bedroom
- Drive for Uber or Lyft on the weekends
- Do yard work for neighbors
- Find an online part-time job
- Other freelance online opportunities
As you can see there are plenty of ways you can earn more money.
However, if you don't have the time, energy, or ability to find more money, you can also look to lower your monthly costs. Here are some suggestions:
- Cancel unnecessary memberships and subscriptions
- Stop dining out
- Don't get commercial coffees
- Stop online/impulse shopping
- Write a grocery list for each trip to the store
- Limit yourself to one TV streaming service
Putting yourself on a strict budget is a great way to limit your spending and find the money you didn't' think you had. Go through your bank and credit card statements to identify where your spending habits are less than ideal.
2. Dispute Inaccurate Discrepancies on Your Credit Report
If you're looking for answers to "how to improve credit score fast," it's possible then that you have negative marks in your credit report. Some may be warranted. However, inaccurate reports or credit errors happen all the time. Learn how to dispute an error in your credit history. Start by getting your full credit report from each of the three bureaus - Equifax, TransUnion, and Experian. Then, look for inaccuracies.
If you find any errors, disputing them and getting them removed is one of the easiest ways to improve your credit score. Contact the credit bureau and the company who reported the issue. There are countless reasons you need a paystub, such as applying for loans, mortgages, or apartment rentals. In these cases, you'll also have an in-depth credit review.
If you have credit errors on your report, it could affect your eligibility. If you're wondering "How can I improve my credit score?" start by asking how others are sabotaging it.
3. Pay All Of Your Bills On Time
If you're looking for tips on how to improve your credit score fast, start by paying all of your bills on time. This includes everything from rent/mortgage payments to recurring services like phone lines, internet, and gym memberships. Most companies have automatic systems that report your payment history to the credit bureaus.
If you're constantly making late or short payments, it will tank your credit score. For some people, it helps to automate all of their recurring bills and payments. Make it easier on yourself so your credit score doesn't suffer. If you're afraid to automate payments because you're not sure you'll have enough money, refer to Point 1 of this article for tips on increasing your earnings and decreasing your expenses.
It's worth it to find effective ways to improve credit score.
4. Consolidate Your Debt
If you're wondering "how to improve my credit score," consider taking out a consolidation loan to make some of your debt disappear. While your overall debt amount won't change, you can wipe out several small debts (and their interest rates) at once. The debt consolidation loan will consume those debts, which will look better on your credit report.
Furthermore, debt consolidation will drastically improve your debt to income ratio. Not only will your monthly payment amount be lowered, but you'll also have lower interest charges. Alternatively, if you're not planning on moving anytime soon, think about refinancing your home. You can cash out the positive equity and use it to pay off much of your debt.
Once again, this won't lower your total debt amount, but it will make it much more manageable.
To get approved for either a consolidation loan or a home-refinance, you'll need to show proof of income as a self-employed individual. Make sure you have paystubs and/or bank statements ready to go.
5. Use Credit Cards The Right Way
Credit cards get a bad wrap, particularly when talking about debt, interest, and credit scores. However, if you're wondering "How can I improve my credit score?" a viable answer lies in that little plastic card. If you learn how to use credit cards the right way, it's one of the best ways to improve your credit score. You can avoid interest fees and rapidly boost your credit score. Here's how:
- Use your credit card for everything (gas, groceries, bills, etc.)
- Use your checking account to pay off your credit card every month (before you're hit with the interest)
- Each month, your credit card should be paid down to a zero-dollar balance
This method is even more beneficial if you have a credit card with amazing cashback benefits or awards.
6. Raise Your Credit Limits
Finally, if you're thinking about "how to improve credit score fast," talk to your credit card companies and recurring loan providers (lines of credit). Ask if you can get your credit limit raised. However, do not use that money. People sabotage their credit scores by maxing out their credit cards and other lines of credit. This shows that you have no problem borrowing money, but struggle to pay it back.
Increasing your credit limit, on the other hand, shows that you have credit to your name, but don't need to use it. This is one of the best tips on how to boost your credit score fast.
Are You Still Wondering "How To Improve My Credit Score?"
Listen, we understand that our society sets people up for failure. It's so easy to borrow money, even if you have poor credit. Yet, interest rates and minimum payments make it nearly impossible to pay the debt back. Using the advice above, you can both pay down your debt and solve the question of "how to improve my credit score fast." If you still need help applying for a consolidation loan or need proof of income, browse through our pay stub templates and choose one that best suits you!