Give Your Credit Score a Quick Boost

/ BY / Credit Score

When you're applying for a mortgage or a vehicle loan a difference of even a few points in your credit score can make a big difference in the interest rate that you're able to get. If you'd like to position yourself for a lower rate, here are some things that you can do to raise your credit score fairly quickly.

    1. Check your credit report for errors.
      Banks and other creditors do make mistakes. They might report to a credit bureau, that you have a late, unpaid balance on an account with them when you’ve actually paid that account off. Such misinformation can subtract several points off your credit score.

      It happens more often than you think. A study by the Federal Trade Commission found that five percent of consumers—one person in twenty--had errors on their credit report that could impact their credit score and force them to pay a higher rate of interest for credits and loans.

      Make time to do a careful examination of your credit reports so this doesn’t happen to you.

    2. Get current on any past-due accounts.
      Late payments are a real drag on your credit score. Concentrate on getting them cleared and on keeping your current accounts up to date so that your credit report shows no past due loans or accounts.
    3. Pay down your credit card balances.
      A debt-to-income ratio (DTI) that’s above 30 percent can have a negative effect on your credit score. To figure out your DTI, take the amount of debt you owe each month (mortgage, vehicle and student loans, alimony or child support payments), divide it by your total monthly income and then multiply the result by 100.

      If your DTI is too high, you’ll either have to find another job (or take a part-time job) to raise your income or pay off some of your debt. Reducing your credit card balances is a good place to start.

    4. Avoid closing credit card accounts
      If you cancel a credit card that has a $5,000 credit limit you’re making it harder to reach an optimal DTI. Keep the account open, even if you don’t use it. (And if it’s one of your older accounts, you might want to consider dusting the card off and starting to use it again—see #7.)
    5. Take out a small personal loan.
      It may seem counter-intuitive to borrow money when you’re trying to boost your credit score but the fact is that the credit bureaus like to see a mix of credit types—auto loans, credit cards and personal loans—when they’re calculating your score. So even if you don’t need the money you should apply for a short (three-to-six month) loan from your bank.

      If you don’t want to get more deeply in debt, just put the money aside in a bank account. Whether you save the money from the loan or spend it, make sure that you repay the loan promptly. The last thing you want to do is add late payments to your credit report.

    6. Become an authorized user on another person’s card
      If you have a family member or very close friend who has a good credit score, you may be able to get a lift to your own score by becoming an authorized user on one of their credit cards. Even though you won’t be responsible for paying off the card, it will show up on your credit report, and every good account is a plus for you.
    7. Keep using—or start to use—your oldest credit cards.
      The credit bureaus like to see that you’ve been using credit responsibly for a long time, so if you’ve been favoring newer credit cards over older ones you may want to rethink your spending habits and pull out the old card more often.

While there’s no way to raise your credit score within a week or two, it’s not impossible to increase it over the course of a few months. Just keep doing everything you can to prove to the credit reporting bureaus—and to potential creditors—that you’re a good risk.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.