Credit Repair

How to Increase Your Credit Score by 100 Points in 7 Steps

Your credit score is the gateway to almost all your financial goals, from applying for a mortgage to purchasing a car. Having a good credit score can help you get the credit you need, as well as receive better interest rates and terms on loans, cell phone service plans and more.

So, what do you do if your credit score isn’t top-notch? Here are a few tips to quickly increase your credit score by 100 points.

1. Check your credit score
2. Review your credit report and report errors
3. Address any outstanding payments
4. Check your credit utilization ratio
5. Keep your oldest line of credit open
6. Don’t open multiple accounts at once
7. Maintain a healthy mix of credit types

7 steps to increasing your credit score by 100 points

1. Check your credit score


You can’t start improving your credit score, such as your FICO Score, until you know where you stand. There’s a common misconception floating around that checking your credit score lowers it. This isn’t accurate. You can request your credit score for free once a year from each of the three major credit reporting bureaus — Equifax, TransUnion or Experian. You may also be able to access your credit score through your bank, credit union or My LendingTree.

Your credit score will fall within the range of 300 to 850. When you check your score, it can be tough to know whether your rating is “good” based on the three-digit number you see. Here’s a look at how your score ranks:

Credit Score Ranks
FICO Score Range Rating
300-579 Very poor
580-669 Fair
670-739 Good
740-799 Very good
800-850 Exceptional

You’re looking to have a good or better FICO Score when applying for loans to get the best interest rates. As you can see, these ranges aren’t very broad. Boosting your credit score by 100 points by making a few lifestyle changes can have a huge impact on your score and your financial life.

2. Review your credit report and report errors

Once you know your credit score, you’ll need to check your credit report. Your credit report lists what’s going on in your credit history that could positively or negatively impact your score. To check your credit report, you can visit AnnualCreditReport.com for a free copy, or you can request your report from Experian, TransUnion or Equifax.

There are a few factors that affect your credit score, and they each hold a different weight:

Factors That Affect Your Credit Score
Credit Score Factor Weight
Payment history 35%
Utilization 30%
Length of credit history 15%
Recent activity 10%
Credit mix 10%

When you’re looking at your credit report, take note of which areas of your credit history have room for improvement. Is your credit utilization high? Do you have too much of one type of credit? Have you missed payments recently? These are the areas you’ll start to tackle to boost your score in the coming months.

It’s also important to look for any errors in your credit report. By taking the time to report any errors and request that they get erased from your record, you can start improving your credit score quickly. You can dispute errors on your credit report by opening inquiries with each of the three credit bureaus online or by writing a letter. Be prepared to provide any documents proving the mistake in your credit report. Don’t forget to follow up.

3. Address any outstanding payments

The biggest part of your credit history that’s working against your goal of quickly improving your credit score is your payment history. Do you have any payments you’ve missed recently? Late payments stay on your credit report for up to seven years. But as time goes on, the impact of those late payments is smaller as they get canceled out by more frequent, recent on-time payments.

Late payments on your credit history reflect a pattern of behavior that lenders evaluate when deciding whether to lend to you (or what type of rate they can afford to give you). Stumbling occasionally along the way isn’t going to impact your score dramatically, but consistent late or missed payments throughout your history show a pattern of risky lending behavior.

If you’re stuck with a laundry list of outstanding payments, start your credit improvement mission by paying those balances. Then work to stay on track by always making on-time payments. Missed payments can lower your credit score by as much as 100 points — and addressing these payments will help you bounce back, especially when coupled with on-time payments going forward.

4. Check your credit utilization ratio

Your credit utilization ratio should be about 30% or less of your total available credit. If you have three credit cards, each with a $2,000 limit, you’ll want to keep a total balance of $1,800 or less. If your utilization rate is too high, it may be time to get serious about focusing on repayment.

Low credit utilization shows lenders that you have more capacity to take on different lines of credit and will be more likely to pay them back over time. If you have high credit utilization, lenders may feel that you’re already “maxed out” — and could be less likely to repay debts. They may choose not to lend to you, or they may offer a higher interest rate if they do approve your application.

Lowering your credit utilization ratio by paying off “revolving credit,” such as your credit cards, has the potential to boost your credit score. For example, if you pay your credit cards slowly over time, you will see small “bumps” in your score periodically. If you pay it off all at once, then maintain a $0 balance, you will soon see a moderate increase. Paying off your maxed-out credit cards, or paying down debt could increase your credit score by anywhere between 10 to 45 points.

LendingTree offers a free Credit Analyzer tool for consumers to assess their credit and debt situation, as well as make recommendations based on financial goals.

5. Keep your oldest line of credit open

Length of credit history accounts for 15% of your total credit score. This means that it’s important to keep your oldest lines of credit open, even if you’re not actively using them. Holding on to old credit cards with low limits and high interest rates will continue to lengthen your credit history with each passing year. If you do choose to close your oldest line of credit, your credit score may drop — although it won’t be a significant dip in your score, as your total credit history only accounts for 15% of your total credit score. The information will drop off your history in seven to 10 years.

6. Don’t open multiple accounts at once

Recent activity accounts for 10% of your total credit score. Make sure you’re pacing yourself when taking on new lines of credit. If you’re applying for an auto loan, a mortgage and a new credit card, all three of those applications are going to impact your credit report negatively — at least temporarily.

If you’re trying to improve your credit score, think about spacing out any future lines of credit that you plan to apply. Opening several credit accounts at once could be a red flag for a lender.

7. Maintain a healthy mix of credit types

Showing diversity in your credit report shows lenders that you can responsibly manage several different types of credit. This might mean you have five credit cards and one mortgage, you work to pay off a few of the cards and close them out or transfer several balances to a new 0% interest balance transfer card.

Remember: You don’t need to apply for different types of credit to get a quality credit mix. This is just something to keep in mind next time you want to apply for another auto loan or credit card.

Benefits of a better credit score

All these steps may seem like a lot of effort for very little payoff. But having a better score, or improving your credit score by just 100 points, can have a big impact on your financial life.
1. You may qualify for better rates: When lenders see that you have a good (or better) credit score, they’re more likely to trust that you’ll repay the loan they give you. As a result, you may qualify for better rates that reflect that you’re a low-risk borrower. Although this may not seem like a big deal, qualifying for better interest rates on various lines of credit can save you thousands of dollars in your lifetime.
2. You may be more likely to receive credit: If you have a bad credit score, lenders may be less obliged to lend to you. When your credit score is good, you’re more likely to qualify for loans, mortgages or other lines of credit when you need them.
3. Good credit scores help you when applying for everyday necessities: This includes cell phone plans, apartments or homes you’re interested in renting, getting your utilities turned on and more.

Having a good credit score is an excellent first step to getting a head start on your financial life. By following these steps, you can start improving your score quickly.

 

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