Want to take out a mortgage? Move into a new apartment? It could all depend on your credit score. Luckily, credit scores update about every 30 days. This gives you a 30-day window to bring up your score between updates. You may even raise it enough to secure a much lower interest rate for a loan or a new credit card with more benefits. Check out these top seven tips on how to improve credit score in 30 days.
Understand What Your Credit Score Reflects
When it comes to taking out a loan (or sometimes even renting an apartment), your credit score is your reputation and your resume. This three-digit number shows your bank or landlord your ability to pay back a loan. It accounts for and weighs factors like your payment history, your balances, your length of credit history, your new credit, and your types of credit. If you want to improve your credit score, you first need to understand the determining factors fully. Spend some time learning about credit so that you know what habits you can change to improve yours.
Negotiate Your Late Payments
Missed or late payments happen. Luckily, some creditors will “erase” the debt. Offer to pay your remaining balance or part of it in exchange for your creditor reporting your account as “paid as agreed.” If you are lucky, they will remove it entirely. Make your offer in writing and get a written agreement before you pay. Your creditors might turn you down, but you have nothing to lose by asking. If you do not get it removed, the late payment could negatively affect your credit score for up to seven years.
Dispute Errors on Your Credit Report
One in 20 people have large errors in their credit reports. Once a large error is removed, an individual’s credit scores will bump up by at least 25 points. Examples of these errors included things like mistakenly reported late payments or incorrect balances.
To know if this is your situation, you first need to get a free credit report from the three different credit-reporting companies. Then, look over, compare, and verify your credit history. See an error? Contact the credit-reporting agency as soon as possible to dispute errors. You will need to provide proof, so gather up things like payment records, court documents, and identification. Once the agency receives your claim, they have 30 days to evaluate it. If corrections are made, you will see them reflected in your score. This can all happen in as few as 30 days.
Reduce the Amount of Debt You Owe
Another tip on how to improve credit score in 30 days requires reducing your debt. Not only will this increase your available credit limits, it will also help lower your debt load. Make a plan to pay extra on credit card, home mortgage, or student loan debt. If you have large balances and can make some big payments fast, you can earn even more points.
Just paying down your credit card balances to less than 30% will make a huge difference. On average, someone with a 680 credit score leaves a revolving balance of about 40% to 50% at the end of a billing cycle. Someone with a 780 credit score’s balance is 15%-25% of their credit card limit. You can calculate your revolving balance ratio by dividing your unpaid balance by your credit limit. Aim to bring your balances below 30% and you will improve your score within 30 days. Here are some simple ways to lower your credit card debt.
Increase Your Credit Card Limits
You can also reduce your revolving balance (and thus improve your credit score) by raising your credit card limits. Be careful how you go about this. Call your credit card companies and negotiate an increased credit limit. However, you do not want them to run a hard inquiry into your credit. Hard inquiries show up on credit reports and actually lower your credit score. Instead, request a soft inquiry, which does not affect your score. If you already have decent credit and a solid payment history, you have a higher chance of success.
Do not take advantage of your raised limits by spending more money. Keep your spending habits the same and watch your credit score improve. Your revolving balance ratio will decrease and hopefully land you in the 15%-25% zone.
Take a Month Off of Primary Credit Card Use
Having a lower debt-to-income ratio will positively improve your credit score. Luckily, you can achieve this in just 30 days. Simply time your shopping well. After paying off a credit card, wait for an entire billing cycle before using it again. Typically, credit card companies will report your credit score right before your bill is due. This means your account balance (a debt) gets reported, even though you will be paying it off shortly. If you wait a full 30 days after paying a card off, your credit card company will report a balance of $0 to the credit bureaus. This low balance translates to a lower debt-to-income ratio and raises your score.
Use Your Inactive Cards
Although somewhat contradictory to the tip above, intentionally using inactive credit cards will also help. The average American carries around three credit cards in their wallet. Owning this many cards will not help you unless you are actively using them and paying off their balances. Your credit score accounts for the number of credit lines you have open, but these accounts must show activity to benefit you. Make some small charges to cards you have not used within the last 6 months. Quickly pay this money back, even before the bill’s due date.
Following any combination of the above tips on how to improve credit score in 30 days will raise your credit score and help you secure a better mortgage, car loan, or even a place to live. For the most part, these are not once-and-done methods. Make them part of your regular financial routine.
