How to improve your credit score fast: 10 proven strategies

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Your credit score is a crucial three-digit number that impacts your financial life. This score, typically ranging from 300 to 850, is used by lenders to assess your creditworthiness when you apply for credit cards, mortgages, auto loans, personal loans, and student loans. 

Most lenders consider scores of 740 or higher to be very good, while scores of 800 or above are excellent. A higher score increases your approval odds and helps you secure better interest rates, potentially saving you thousands of dollars over time.

The good news is that improving your credit score is achievable with the right strategies and effort. While it may take time, especially if you're starting with a low score, the financial benefits are well worth it. 

The factors that impact your credit score

Understanding what influences your credit score is crucial for improving it. According to myFICO, five main factors determine your credit score:

• Payment history (35%): This is the most significant factor in your credit score calculation. It includes your record of paying bills on time on your cards, mortgages, and other loans. Consistently making on-time payments is crucial for a good credit score.
• Amounts owed (30%): Also known as credit utilization, this factor considers how much of your available credit you're using. High card balances relative to your credit limits can negatively impact your score. Aim to keep your credit utilization below 30% for the best impact on your score.
• Length of credit history (15%): This factor considers how long you've had credit accounts. It considers the age of your oldest account, the age of your newest account, and the average age of all your accounts. Generally, a longer credit history is better for your score.
• Credit mix (10%): A diverse mix of credit types can positively impact your score. This includes revolving credit (like credit cards) and installment loans (like mortgages or auto loans). While you don't need one of each type of account, a mix is generally viewed positively.
• New credit (10%): This factor considers how many new credit accounts you've opened recently and how many hard inquiries are on your credit report. Opening several new accounts in a short period can be seen as risky behavior and may lower your score.

Understanding these factors provides a roadmap for improving your credit score. Focusing on these areas, particularly payment history and credit utilization, can significantly improve your credit score over time.

10 ways to improve your credit score fast 

1. Pay your bills on time

Paying your bills on time each month is the most important step to building a strong credit score. This single factor accounts for 35% of your score, making it the most influential component.

Lenders report your monthly payments for loans, mortgages, and credit cards to the three major credit bureaus (Experian, Equifax, and TransUnion). Consistently paying on time will steadily increase your credit score over time.

On the flip side, a payment more than 30 days late is also reported, potentially causing your credit score to drop by almost 100 points, according to FICO.

To avoid paying late, set up automatic payments for recurring bills and use reminders for payment due dates. Consider paying bills as soon as you receive them rather than waiting for the due date.

John Jones, an investment advisor representative at Heritage Financial, emphasizes the importance of financial discipline. He suggests only charging what you can pay in full monthly on your credit cards and saving money for big purchases instead of relying on credit. 

"Financial responsibility leads to positive credit scores and minimal interest payments in the long run," Jones says. "Living within your means and avoiding overextension through unaffordable purchases will yield long-term benefits."

2. Keep your credit utilization ratio low

Don’t run up the balance or max out your credit card. This will hurt your credit utilization ratio, a critical factor in your credit score. This ratio measures how much of your available credit you use at any given time.

You can calculate your credit utilization ratio by dividing how much credit you’ve used against your credit limit. For example, if you have a $2,000 credit limit and a $1,000 balance, your utilization is 50%.

High credit utilization can indicate to lenders that you're overextended and may have difficulty making payments, which can lower your credit score. Experts generally recommend keeping your utilization below 30%. Some suggest aiming for 10% or lower for the best impact on your credit score.

To lower your credit utilization, pay down existing balances or make multiple monthly payments to keep balances low. You may also want to consider asking for a credit limit increase (but avoid the temptation to spend more). 

3. Don’t close old credit card accounts

While it might seem logical to close credit cards you no longer use, doing so can harm your credit score.

Closing a card reduces your available credit, potentially increasing your credit utilization ratio. For example, If you have three cards with a total $10,000 limit and $2,000 in debt, your utilization is 20%. If you close one of the cards with a $4,000 limit, your utilization jumps to 33% ($2,000 ÷ $6,000).

Plus, the length of your credit history accounts for 15% of your FICO score. Closing old accounts can shorten your average account age, potentially lowering your score.

Instead of closing old cards, consider keeping them open and using them occasionally. Make sure you set up automatic payments or calendar reminders to use and pay off the card. If you have an old card with an annual fee, consider downgrading it to a no-fee card rather than closing the account.

That way, you can maintain a longer credit history and lower overall credit utilization, which can boost your score.

4. Limit new credit applications

Applying for multiple cards or loans at once can negatively impact your credit score. This is due to what's known as a "hard inquiry" on your credit report. When you apply for credit, lenders check your credit report, resulting in a hard inquiry.

According to Experian, each hard inquiry can lower your score by up to five points. Multiple inquiries in a short period can compound this effect. Too many hard inquiries can make it appear that you're taking on too much debt, which can be a red flag to lenders.

The good news is that the impact of hard inquiries is temporary. Your score typically recovers within a few months if you practice good credit habits.

To minimize the impact of hard inquiries on your score, limit your applications for new credit to only what you need. Be selective about the cards you apply for, and avoid applying for products you don't need or are unlikely to qualify for.

5. Monitor your credit reports for errors

Errors in your credit report can unfairly lower your credit score. To ensure your credit reports are accurate, make a habit of reviewing them regularly.

Common errors include outdated information, incorrect payment statuses, or accounts that don't belong to you. Identifying and correcting these errors can lead to an immediate improvement in your credit score.

You're entitled to one weekly free credit report from each major bureau. Review each report for inaccuracies, and pay special attention to payment histories, account balances, and personal information.

If you find an error, dispute it with the appropriate credit bureau immediately. The bureau must investigate your claim and remove any inaccurate information, which can help improve your credit score.

It’s a good idea to set reminders to check your reports regularly, ideally once every four months. Consider using a credit monitoring service for real-time alerts of changes to your credit report.

6. Diversify your credit mix

A diverse mix of credit types, such as credit cards, installment loans, and mortgages, can boost your score. Credit mix accounts for 10% of your FICO score, and a solid mix shows lenders you can manage various types of credit.

However, that doesn’t mean you should open a bunch of news accounts solely to improve your credit score. Only apply for credit you need and can manage responsibly.

If you have limited credit experience, consider starting with a secured card or a credit-builder loan to help you establish a positive credit history.

While a diverse credit mix can help your score, it's less important than payment history and credit utilization. Always prioritize making payments on time and keeping balances low.

7. Become an authorized user

If you struggle to qualify for a card, becoming an authorized user on someone else's account can be a strategic move to build your credit. 

An authorized user has permission to use another person's credit card account. You get your card linked to the account but aren't legally responsible for payments.

The benefit is that the account's payment history is reported on your own credit report. That way, you can benefit from the primary account holder's good credit habits. It's a way to establish or improve your credit history without applying for your card.

There are some potential risks. If the primary account holder makes late payments, it can negatively impact your credit score. The primary account holder is also financially responsible for all charges, which can strain your relationship if not managed properly. 

If you’re considering becoming an authorized user, choose a trusted family member or friend with a good credit history. Establish clear agreements on spending limits and payment responsibilities, and monitor your credit report to ensure the account is being reported correctly.

Ideally, becoming an authorized user should be a stepping stone to build your credit, not a long-term solution.

8. Use a secured credit card to build credit

A secured card can be an excellent tool for building or rebuilding credit, especially if you can't qualify for a traditional credit card. A secured card is a card that requires a cash deposit as collateral. Your credit limit is typically equal to your deposit amount. 

For example, let’s say you make a $500 deposit with the issuer. This deposit becomes your credit limit. You can then use the card like a regular credit card to make purchases and payments. Payment activity is reported to credit bureaus, helping build your credit history.

Secured cards are easier to qualify for than traditional credit cards and help establish or rebuild credit history. 

To use a secured credit card effectively, make small monthly purchases and pay your balance in full and on time. Your payment history will be reported to the credit bureaus, helping you establish a positive track record.

Over time, as your credit score improves, you may be able to qualify for an unsecured credit card. Some issuers even offer automatic upgrades to unsecured cards after a period of responsible use.

9. Pay down your debt and keep your balances low

High balances can negatively impact your score, even if you make all your timely payments. This is because high balances can increase your credit utilization ratio. Focus on paying down your debt and keeping your balances low to improve your score.

The average American had a credit card debt balance of $5,221, according to Red Ventures data. With an average interest rate of 20.71%, this translates to about $90 in interest alone. 

If you’re looking to pay down your debt, there are two strategies you can use: the debt snowball method and the debt avalanche method. 

• With the debt snowball method, you focus on paying off your smallest debts first while making minimum payments on your larger debts. Once your smallest debt is paid off, you roll your payment on that debt into the next smallest debt, and so on, until all your debts are paid off. This method can help you build momentum and stay motivated. 
• With the debt avalanche method, you pay off your highest-interest debts first while making minimum payments on your other debts. Once your highest-interest debt is paid off, you move on to the next highest-interest debt, and so on, until all your debts are paid off. This strategy can help you save more money in interest over time. 

Whatever method you choose, the key is to stay consistent with your payments and avoid taking on new debt while working to pay off your balances. Your credit score will improve over time as you reduce your debt and keep your balances low.

10. Be patient and consistent

Improving your credit score is a marathon, not a sprint. No quick fix or overnight solution can take you from a low score to a perfect 850. According to Experian, depending on your starting point, it could take a few months to several years of good financial habits to significantly boost your score. 

Building and maintaining a good score requires patience and consistent positive financial habits. 

Focus on making small, incremental changes to your credit habits, such as paying your bills on time, keeping your credit utilization low, and monitoring your credit reports for errors. Over time, these positive actions will compound, and your credit score will rise. 

During this process, it is important to stay patient and committed to your goal. Track your progress regularly, but don't obsess over small fluctuations. Keep working towards your goal, and trust that your efforts will pay off in the long run.

Remember that good credit habits benefit your overall financial health, not just your credit score.

The bottom line

As you continue to practice good credit habits, you'll be rewarded with a stronger credit score and better opportunities. A good credit score can open doors to lower interest rates, higher credit limits, and easier loan approvals, which can help you achieve your financial goals and build long-term wealth.

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.