7 Ways to Raise Your Credit Score Fast - The Motley Fool

Patience and persistence are key to building credit, but these tricks speed up the process.

Whether you're planning to take out a personal loan, buy a house, or get a new car, good credit is often required. What's more, you could save a lot of money on interest if you can improve your credit score before you apply for a loan.

It takes time to build credit, but that doesn't mean you can't start today. Here are some of the fastest ways to raise your credit score.

1. Pay off credit card debt

The best way to raise your credit score quickly is to pay off credit card debt. This will help you improve the two factors that together account for the majority of your credit score: payment history and credit utilization ratio. Your payment history reflects your record of paying bills on time and your credit utilization or debt-to-credit ratio is calculated by dividing your total revolving debt divided by your total available credit.

What's more, the "amounts owed" section of your credit report is updated monthly. So chipping away at your balance is a great way to see a near-immediate impact on your credit score.

2. Ask for a credit limit increase

The lower your debt-to-credit ratio the better as it accounts for 30% of your credit score. As discussed above, you can lower this ratio by paying off debt. But you can also lower it by increasing your available credit.

Call your credit card issuer to request an increase to your credit limit. Make sure to ask if the card issuer will do a hard pull on your credit report, as this could temporarily ding your credit score a few points.

3. Become an authorized user on someone else's credit card

Another nearly-immediate way to improve your credit score is to be added as an authorized user on someone else's credit card, as long as that credit card is used responsibly. If the person who added you racks up a balance or misses a payment, it will drag your score down too, making this a risky option. It's risky for the primary cardholder as well, as they will be liable for any balance you rack up if you fail to pay it off.

4. Use your credit card and pay it off in full each month

You can't build credit if you don't use it. This tried-and-tested method of building credit can take longer than those above, but it's the most dependable way to raise your credit score in the long-run. If you don't use your credit card much at the moment, start putting a few small purchases on it each month and pay it off in full before your due date. As long as you keep your balance low and never miss a payment, each month you'll be adding a positive mark to your payment history, which is the most important factor in determining your credit score.

5. Sign up for credit boost services

Be careful when signing up for services that claim to increase your credit score, as many of them are scams. However, credit bureaus are using banking data to calculate some of their scores, which could give you a boost by providing a more holistic picture of your finances. Opting into Experian Boost or UltraFICO™ can level up your credit score if you pay your bills on time and bank responsibly. Keep in mind, however, that not all lenders will look at these versions of your credit score.

6. Open a new credit card

This option isn't for everyone, and if you run up a balance or miss a payment, it can actually damage your credit score. However, if you do have a high debt-to-credit ratio (above 30%), and your credit card issuer won't increase your credit limit, you could try opening another credit card. This will increase your overall available credit and decrease your debt-to-credit ratio.

Be aware that it will also result in a hard pull on your credit report, which could drag your credit score down a few points. This ding is temporary though, and your credit score should start to recover in a few months. If you're playing the long game, it could be smart to have access to another credit card. But if you plan on applying for a loan within the next year, it might not be wise to open new accounts.

7. Get errors on your credit report removed

This is another one of the fastest ways to improve your credit. You're normally entitled to a free credit report from each of the three major credit bureaus every year. But right now you can check your credit report every week as the bureaus have made free weekly credit reports available until April 2021.

Comb through these credit reports to make sure everything is accurate. If you find an error, you can file a dispute with the credit bureau. If the negative mark is removed, your credit will bounce back.

Good credit isn't something you can achieve overnight. Luckily, though, there are plenty of actions you can take to give your score a quick boost.

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7 Ways to Raise Your Credit Score Fast - The Motley Fool
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