📝 10-Step Strategy to Increase Your Credit Score Fast
Having a good credit score can unlock lower interest rates, easier approvals, and even higher limits on your loans and credit cards. However, despite its importance, about 40% of Americans still have a score of under 700. If that's you, don't worry, because in this article, I'm going to share a simple 10-step strategy where you can hyper increase your credit score fast, starting even as soon as this month.
Table of Contents
1. Reviewing your credit report and submitting a dispute
2. Utilizing a free AI tool to generate a dispute prompt
3. Maximizing your payment history
4. Keeping your overall utilization low
5. Consolidating all of your debts
6. Increasing your income to pay off your debts
7. Keeping your credit age consistent
8. Diversifying your credit mix
9. Monitoring your own credit
10. Piggybacking on someone else's good credit
Reviewing Your Credit Report and Submitting a Dispute
The first step in improving your credit score is to review your credit report and submit a dispute if necessary. It turns out that 66 million people, or at least 20% of Americans, have at least one error on one of their three different credit reports. These reports are generated by the credit bureaus Equifax, Experian, and TransUnion, and they all collect and interpret information differently. Therefore, you'll have to check each one of them for any potential errors.
To do that, go to the website annualcreditreport.com, which is directly vetted by the FTC on the official government website, so you know you're in the safest hands possible. Your goal here is to go through and comb for any errors that you notice, including addresses, payment history, credit ped audit, and everything about your credit report. Make sure that things add up and that there aren't any mistakes. Even if you're paying your credit cards on time, because of the mistakes that these companies make, they could still damage your score.
If you find an error, you'll need to get documentation to file a dispute. For example, if a credit bureau is saying that you missed a payment, get confirmation showing that you indeed made the payment. If the report shows an account you closed as open, get the document that shows that the account was actually closed. This will be the proof that you need for your dispute claim.
Next, find the dispute form for the respective credit bureau. If TransUnion might have reported an error on your report but not Equifax, make sure that you're disputing it with the right agency. If you need a link to the dispute forms, I can send you an email on that with the link down below in the description.
Utilizing a Free AI Tool to Generate a Dispute Prompt
Once you have all the documentation, the next thing I would personally do is to utilize a free AI tool like ChatGPT. In the past, you could literally just go on Google and look up a template for disputes that you can automatically send to some of these credit bureaus. But I think ChatGPT right now is going to be able to do a better job because a lot of these credit bureaus get the same template over and over again, and sometimes they may automatically decline you because they know internally on their system that you're not spending much time and that this is amongst many different templated responses that they get all the time.
Get the information put into ChatGPT, put in the prompt "Help me to dispute this inquiry on my credit report, which is not true." It's going to then go ahead and generate a whole prompt. You copy and paste that, insert it into the dispute form, and then from there, when you send it off, you should be hearing back within a few weeks or even a few months because I know a lot of these credit bureaus move at snail mail time. Once you hear something back and they go ahead and remove the inquiry or the false information on your account, you should see an instant positive remark on your next credit score cycle.
Maximizing Your Payment History
The biggest factor that makes up your credit score is your payment history, which makes up 35%. This section is rather simple but can make a huge difference. To maximize your payment history, you want to be paying your balances off in full every single month. To do this, start by setting up automatic payments on all of your credit cards and loans if they're not already turned on. If you have a mortgage, a car loan, a line of credit, and multiple credit cards, all it takes is one slip up to miss a payment. Automatic payments make it effortless and remove any potential for human error.
If you're purposely not turning on automatic payments because you have more bills than the income that you make, we'll talk a little bit more about what you can do in that situation in a few minutes. Regarding the topic of at least just staying on top of your current payments, the next step here is to then know what your deadlines are. Something I used to do way earlier on was to go into my Google Calendar and to at least input the notifications and set it monthly to remind me the day before of when a payment was due and when it was pulling out.
From there, you want to go ahead and pay off the balance to your credit cards before it actually reports to the credit bureau. This actually segues very well into point number three, which is just keeping your overall utilization low.
Keeping Your Overall Utilization Low
This aspect makes up 30% of your credit profile, and credit utilization is going to be the biggest portion. Simply put, this is just the amount of available credit that you're using. One method to improve this category is to simply open more credit cards. If you have a habit of having credit card debt, skip this tip here. But if you can use cards responsibly, there's no reason you shouldn't have at least 20 different credit cards. Each new credit card you apply and get approved for increases your total credit limit.
Assuming that my spend is the same, having 10 cards with a $10,000 limit each would mean my utilization would go down drastically because I would have $10,000 in a total credit limit across all my accounts. But if I'm using only $4,000 of that, my utilization then becomes less than 5%. I highly recommend you always keep your balances under 30%, and if you're looking to get the perfect credit score of 850, you need to keep your utilization at 1%.
To keep it under 1% automatically, pay your card before the statement balance due date. When setting up automatic payments, a lot of these companies will ask you when you want your balance to be taken out. A lot of people will do statement balance in the middle of the month, but if you go ahead and do it a week before or even two weeks before, you can pay off that remaining amount before anything gets reported onto your credit score. This is one of the techniques that people do in order to reduce the amount of utilization shown on your credit score and thus improving your own credit score drastically.
On the off chance that your credit utilization is rather high and this is because you can't pay your balance off in full, I got a solution for you.
Consolidating All of Your Debts
If you're carrying a balance on your credit card, chances are you're paying some high-interest debt, which can go up to even 20% to 30% or more with rising interest rates from the federal government. You want to make sure that you're able to at least save the 20% to 30%, which can add up to be a significant amount. One simple trick here is to just get a credit card like the Chase Freedom Flex, the Capital One Savor One, or the Capital One Quicksilver card, where these cards offer the benefit where on the first 12 to 15 months, depending on the card's terms, you can get a 0% APR and a $0 balance transfer fee.
This means when you apply for one of these cards, you can actually have a balance sent from one credit card over to the new one with the 0% interest APR offer. By doing this, you're going to be able to avoid paying any interest on those balances for a set period of time, usually anywhere from 12 to 15 to even 21 months. Just make sure that if you do transfer your balance to another card, you work on paying that balance down. Otherwise, you're just moving your debt from one another, and you're prolonging the eventual coming of the fact that you need to pay off your credit card debt.
If you want to get started with one of those cards or even open a new one to increase your total credit limit, I'll also have a resource for checking out some additional credit cards linked down below in the description.
Increasing Your Income to Pay Off Your Debts
If you want to get the most fast results, you'll need to put the work in. Carrying a balance on your card is a hole you want to dig yourself out of, so don't shy away from saying no to going out, just drinking at a bar, spending money with people that you don't care about. Instead, say yes to starting a new side hustle or picking up a new side job to earn extra income to put towards that balance.
Keeping Your Credit Age Consistent
The length of your credit history makes up 15% of your credit score. One of the most common mistakes that people make is closing credit cards that they're not using. If you have a card that has no annual fee, do not cancel it. Just put it in a sock drawer and close it up. This is because if you cancel the oldest credit card, you'll see your credit age drop. If you close your oldest account and that disappears off your record, this could show to the banks that you just got into the credit game a bit more recently and you're more of a higher risk.
Diversifying Your Credit Mix
Your credit mix makes up 10% of your profile and is best optimized by having a wide array of different credit options on your profile. Banks want to see that you don't have just one or two types of credit cards that you reliably use, but they want to see a big blend of the whole pie. This includes having credit cards, car loans, mortgage payments, lines of credit, your phone bill, or even things like your student loans. The more diverse the mix is, the better your reliability is.
Monitoring Your Own Credit
Always make sure you're monitoring your own credit. Set email and text reminders for your credit card companies like AMX, Capital One, Chase, and more. This means anytime you see an inquiry on your account, you're going to know right away what that is. This has also been very helpful because I have gotten my identity stolen before in the past. If back then I was paying attention to all the inquiries coming in, I would have been able to save myself a lot of headache.
Piggybacking on Someone Else's Good Credit
The last 10% of your score is made up by your new credit. This means when you get a hard pull on your account, you'll have a temporary drop in your credit score. In a situation like this, I'd recommend you avoid opening new accounts because new accounts will drop your score a bit in the short term. However, your score will recover in the next one to two months, so don't let this deter you from picking up new credit cards.
The longer you have a good report of credit, the better your score will be. Therefore, one technique that people utilize to fast-track this aspect is piggybacking. Find a close family member or friend that you can trust that can add you as an authorized user to their account. This person needs to have a good score. They have a shot off score; it's going to do the opposite effect. But what's going to happen in this situation is that they're going to transfer their account history to your account history, which can improve your credit.
Conclusion
By following these 10 steps, you can improve your credit score fast. Remember to review your credit report and submit a dispute, utilize a free AI tool to generate a dispute prompt, maximize your payment history, keep your overall utilization low, consolidate all of your debts, increase your income to pay off your debts, keep your credit age consistent, diversify your credit mix, monitor your own credit, and piggyback on someone else's good credit. With consistent good habits, you'll see your credit score improve in no time.
Highlights
- Review your credit report and submit a dispute if necessary.
- Utilize a free AI tool to generate a dispute prompt.
- Maximize your payment history by paying your balances off in full every single month.
- Keep your overall utilization low by opening more credit cards and keeping your balances under 30%.
- Consolidate all of your debts by getting a credit card with a 0% APR and a $0 balance transfer fee.
- Increase your income to pay off your debts.
- Keep your credit age consistent by not closing credit cards that you're not using.
- Diversify your credit mix by having a wide array of different credit options on your profile.
- Monitor your own credit by setting email and text reminders for your credit card companies.
- Piggyback on someone else's good credit by becoming an authorized user on their account.
FAQ
Q: How long does it take to improve your credit score?
A: It depends on your starting point and how much work you put in. However, by following the 10-step strategy outlined in this article, you can see improvements in as little as a month.
Q: Can I improve my credit score if I have bad credit?
A: Yes, you can. By following the steps outlined in this article, you can improve your credit score regardless of your starting point.
Q: How many credit cards should I have?
A: There's no set number of credit cards you should have. However, having at least 20 different credit cards can help improve your credit score.
Q: Should I consolidate my debts?
A: Yes, consolidating your debts can help you save money on interest and improve your credit score.
Q: Can I piggyback on someone else's good credit?
A: Yes, you can. By becoming an authorized user on someone else's account, you can transfer their account history to your account history, which can improve your credit score.
