Frequently asked question:

How can I improve my credit score?

Your credit score can have a large impact on your life. Getting a loan for a house, car, or a credit card is really important. Having a low credit score can mean that you have more trouble getting approved for loans or a higher interest rate. Higher interest rates can cost you thousands of dollars when buying a house. This is why it is important to monitor and try and improve your score.

Improving your credit score is not an overnight process. It can often take 6 to 12 months to see a large improvement. Recovering from delinquent accounts, late payments, etc. can take a long time. Even though it can take a while, that doesn't mean it is impossible! Instead, think of credit as a marathon versus a sprint. You will need to consistently do the right things to raise your score and keep it at a high level. 

Quick wins in raising your credit

Even though it can take a while, there are a few "quick wins" if you are trying to get a smaller boost in the mean time. You can expect these wins to raise your score a decent amount, but to get to the 750+ level it will require a longer time. If you are looking for a smaller bump, here are some ways to get an increase in a shorter period of time.

Reduce your credit card balance

If you currently hold a high balance on your credit card(s), the first thing you should try to do is reduce your balance. The lower the utilization, the better. The rule of thumb is having under 10% is what you should be shooting for. Here is the formula to figure out your utilization:

(Total credit card balances / Total credit card limit) X 100 = utilization percentage

To specify, you need to add up all of your balances and all of the limits on your cards. To showcase that let's run through a quick example. Let's assume our example person has the following:

  • Credit card 1 with $1,000 balance and $5,000 limit
  • Credit card 2 with $2,500 balance and $3,000 limit
  • Credit card 3 with $500 balance and $750 limit

Let's see what their utilization looks like. Lets use our formula to figure it out. First lets add up the balances and limits:

  • Total balance of $4,000
  • Total limit of $8,750

Then plug it into our formula:

($4000 / $8750) * 100 =  45.7%

Our example person's utilization is a bit high. They would have to reduce their current balances to $875 or less to get under the 10% mark.

Ask for derogatory marks to get taken off of your account

If you have had payment problems in the past, you may have some derogatory marks associated with your name. Some of these marks include:

  • 30 day late payment notice
  • 60 day late payment notice
  • 90 day late payment notice
  • Other delinquencies on payment

If any of these apply to you, there may be a way to get some of these removed from your account. Getting a derogatory mark can help your score immensely as creditors will no longer see it on your credit report when they pull it.

These marks stay on your credit report for up to 7 years. If you want to remove them earlier you can send what is called a "goodwill letter". A goodwill letter is a letter (or email) you send to a creditor asking them to remove a derogatory mark from your report. In it you should highlight why they should remove it. Some examples of why they should remove it:

  • You rectified the situation right away
  • You have been a long time customer of the company and have a long record of paying on time, other than this one mishap
  • It has been a while since this happened
  • You have kept all of your account current with them for X amount of time

This strategy is a bit harder to do if you have multiple delinquencies with the same company. They company might also say no. It's still worth a shot as you never know if they will help you out or not.

To write your letter, try finding an email of someone high up at the company. Craft a thoughtful and professional email and send it in. Hopefully you receive a positive response. If not, you can try again or wait the time period until it falls off your report or no longer affects your score.

Credit Card

Long term ways to improve your credit score

Sometimes, there isn't a short term trick to raising your credit. It can be incredibly frustrating, but sometimes you have to just put in the time. As I mentioned before, it can take 7 years of time for derogatory marks to fall of your report. Fear not, as many of those marks stop affecting your score after 2 years as long as you stay current and on top of your credit. Here are some longer term ways to improve your credit score to eclipse the 750+ mark.

Pay on time, all of the time

This one seems pretty obvious, but that doesn't make it any less important. Having a solid history of paying on time, every time is key. Having years of a great payment history can work against you with even one late account.

If you have had issues in the past, it will take a bit of time to recover. The key here is consistency. As the delinquencies age, your score will go up until one day you notice that it has gotten back to previous levels (or higher!).

Don't apply for credit too often

Credit is an odd game. Creditors want you to have credit history, but don't want you applying for credit all the time. This means applying for credit lines (cards, house, etc.) and then sticking with them for a while. If you apply for credit too often, that could be a signal to future creditors that you always need credit and can make them nervous.

I should say that this has a lower impact on your score than payment history or credit utilization. It is still important to be aware of for your overall credit history.

These are just a few tips on improving your credit score. There is no silver bullet, but your score can be improved. Staying consistent and keeping balances low will keep your credit score high and keep you on the right track!


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