Credit scores can be frustrating. They can either empower you to move forward in life or seriously hold you back.
Mistakes on your credit report can last a long time, keeping your score low. Some negative factors on your credit report can hold your score down for 18 months or longer!
Are you wondering what the fastest way to build credit is? Wondering if it’s possible to boost a credit score overnight?
Well, that’s exactly what this short guide is about. If you need fast ways to build credit, so you can achieve your dreams of owning a home or starting a business, continue reading.
Why Is My Credit Score So Low?
When it comes to your credit score, there are 5 main factors that contribute to your overall score. Each factor is weighted differently.
For example, payment history is the most important factor. 35% of your credit score is determined by payment history. If you make all your payments on time, your score won’t be terrible.
But if you are late on a payment, it can take a big toll on your score. If there’s nothing else you do, make sure to make your payments on time. The best way to do this is by setting up automatic payments on your credit accounts.
Other credit score factors include your credit mix, credit utilization, length of credit history, and new credit inquiries. These range in importance from 10% to 30% of your overall score.
Your credit mix is defined as the variety in open credit accounts. If the only open account on your report is a student loan, for example, your credit mix score will be low. Lenders want to see a variety of different accounts open.
Your credit utilization score is the amount of credit you’ve used. If you have a credit card with a $5,000 limit but have a balance of $2,500, your utilization is 50%. For a good score, you’ll want to keep your credit utilization under 30%.
The length of your credit history is self-explanatory; the longer you have accounts open, the higher this score will be. Lenders want to see you are capable of managing loans and payments over long periods of time.
And lastly, new credit inquiries cause your score to drop initially. When you apply for new accounts, especially multiple accounts in a short amount of time, it can send bad signals to lenders. You may seem financially unstable. Limit new credit applications as much as possible.
How to Boost Credit Score Fast
Different credit factors will take different amounts of time to improve. It’s best to focus on one factor at a time to ensure the fastest results.
Boost Your Score in 3 months
Your new credit inquiries and credit mix factors will each take about 3 months to rise. To improve your credit mix, you’ll want different types of accounts.
Installment credit accounts are those with a fixed balance that you pay back on a regular schedule, such as a mortgage, student loan, auto loan, or personal loan. Revolving accounts are those that don’t have a set end date or balance, such as credit cards or HELOCs.
If you only have a credit card account open (revolving credit), you may want to add a new installment account, such as a small personal loan. If you only have a student loan, consider opening a credit card and charging only what you can pay back each month.
Once you open a new account, you’ll also have a new inquiry on your report. These initially lower your score but can improve again after 3 months. To keep this score high, refrain from applying for credit multiple times per year.
The Slow Improvement Factors
Other factors can take much longer to improve, though they are even more important. Your payment history, the most important factor, can take 18 months to improve after a late or missing payment. The best thing you can do is prioritize making payments on time each month.
The length of your credit history is a smaller factor in your overall score. And this one takes the longest to improve. For a high score here, you’ll want to have accounts open for 5 years or longer. It’s best to keep as many low-interest accounts open for as long as you can.
Student loans or no-fee credit cards will be the best option to keep open. If your credit history is young, it can be daunting to think about improving this factor. But remember, it’s only a small part of your score. Focusing on the other factors will provide much bigger boosts in less time.
Since most credit score factors take 3 months or longer to improve after taking positive action, it’s best to start today, even if you won’t see the results for a little while. Your future self will thank you.
Is It Possible to Boost a Credit Score Overnight?
So what if you don’t want to wait 3 months to improve your score. Are there sneaky ways to build credit faster? While it might not be an overnight change, there are a couple of things you can do for fast change.
First, you’ll want to look over your credit report in detail. As many as 1 in 5 people have mistakes on their credit report. These mistakes are made by lenders or reporting bureaus, not you.
If you find any mistakes, you’ll need to report them directly to the credit reporting company. They are required to look into these and do so within 30 days. If they agree an error is present, they will remove it from your report and update your score accordingly.
Other than errors to fix, there may be derogatory marks that could be removed as well. These could include excessive credit inquiries, outdated or obsolete information, medical bills, and much more.
This can also be a fast track to a better score. If you’d like to get these removed, we can help you do this in order to allow you to receive the loan you are hoping for.
Get Help With Your Credit Score
While you might not be able to literally boost a credit score overnight, there are things you can do for a fast credit score boost. With a little motivation and the right knowledge, you can start seeing your score rise within 3 months.
But if you really want to boost your score fast, you’ll want to ensure your report is free from errors and other misinformation that is weighing you down. Contact us today to find out the fastest way for a higher score