How To Improve Credit Fast | NerdWallet

Hey, I'm Nikita. Welcome back to NerdWallet. You might be as shocked as I was to hear that the average FICO credit score in the US was 714 last year. But if you're not there yet, don't worry. Good credit doesn't come easy. Let's take a look at eight ways to quickly build your credit score. Before I go any further, I just want to set expectations for what I mean when I say fast. There's no solution that will change your credit overnight. It just, it doesn't work that way. After paying off a debt or making other improvements, it can take one to two months to show up on your credit report. The creditor has to first report it to the credit bureaus, which typically only happens once a month. So fast in credit world means results that show up sooner than the several months or years that some other improvements can take, okay? So that said, let's take a look at eight ways to quickly build your credit score. First of all, make sure you're paying your bills on time. Before we can get into any other strategy, we have to talk about the impact that a late payment will have on your score. Missing a payment by 30 days or more can stay on your credit report for seven and a half years. If you do miss a payment, call the creditor immediately to pay up and ask them to consider no longer reporting the delinquency to the credit bureaus. Even if they say no, you should still bring the account current since the longer an account is delinquent, the more it will hurt your score. Next, dispute credit report errors. You'd be surprised how often errors pop up on your report and being diligent and checking your report for mistakes can have a huge and quick impact on your score. You're entitled to free credit reports from each of the major credit bureaus and you will need to check each one individually for mistakes with late payments, someone else's activity popping up on your report or outdated information that should no longer be on your credit report. Once you've made sure your report is current and it's accurate, it's time to reevaluate how you're paying your credit card balances. Credit utilization, that's the percentage of your credit limit that you're actually using, has a big impact on your score. As a general rule, keep your utilization under 30%, but less is better. The highest scores use less than 7%. The key here is to be sure that your utilization is under these marks when your card issuer reports your balance to the credit bureaus. So you'll either want to pay your balance down before the billing cycle ends or pay it a few times throughout the month to ensure it is always low. Another quick way to improve your utilization is to ask your card provider to increase your credit limit. This will instantly improve your overall credit utilization. Most providers will allow you to request a higher limit online and will take your current income and credit history into consideration. Fourth, if you don't have much credit history, consider getting a secured credit card. Secured cards are backed by a cash deposit and your limit is typically the same as the amount of cash you pay to secure the card. You can use the card just as you would any other credit card and making payments on time can help build your credit. Speaking of credit card options, another great way to quickly elevate your score is by becoming an authorized user on someone else's card. If you have a friend or family member who has a credit card with a high limit and a good history of on-time payments, becoming an authorized user can add an additional positive account to your credit report. This will improve your credit utilization and you don't even need to have access to the actual card or account number to benefit. Next, tackle those collection accounts. An account being sent to a collection agency doesn't end with just negatively impacting your credit score. You can still be sued for the debt and face other long-term issues. Work with the collection agency to pay off the debt and request that they remove the collection from your report once it has been settled. And if it's an old collection from over seven years ago, it should no longer be on your report. So be sure to dispute that with the credit bureaus if it is. Also, try getting credit for your on-time rent payments. Not all credit scoring models consider rent payments, but for those that do, a long record of on-time payments can only help. Consider signing up for a reputable rent reporting service to have your monthly rent reported to one or more credit bureaus each month. Some will even report up to two years of rental payments on your current address. This is a great way to show a history of on-time payments. And lastly, add to your credit mix. If you only have loans on your credit report, consider adding in a credit card or vice versa. Creditors like to see that you're experienced managing different types of credit responsibly. And of course, make sure you can afford to pay on-time monthly for any new accounts you add to the mix. Improving your credit takes time, but sometimes you just need a quick bump to help with a loan for major purchase, getting an apartment, or other grown-up life things. Depending on what is holding your score down, it's actually possible to build it by as much as 100 points relatively fast. And I know, a 100-point increase happening fast sounds too good to be true. But in reality, if your credit is in the fair-to-poor area of the credit range, it's actually a lot easier for you to see dramatic results faster than if you already have a good score. There's a lot more to gain, and small changes really can have a big impact. Like I said before, improving your credit score is a long-term process. But following some of these tips, gaining up to 100 points relatively fast really is achievable. Just remember to be diligent in checking your scores and keep paying those bills on time and keep that utilization low to avoid your score declining. I'll drop some resources down in the description below for you to get access to your free credit reports and learn more about credit scores. Thanks for stopping by. If you found this video helpful, be sure to give it a thumbs up. And if you're curious about how to get that elusive unicorn known as the perfect score, check out this video from our personal finance expert, Liz.