Raise Your Credit Score From 603 to 739 In Under 11 Months?
A bad credit score can cost you a lot of money.
Higher interest rates on credit cards and loans can result, or you could simply not qualify for a credit card that awards travel rewards points so you can take a free vacation.
Raising your credit score from 603 (bad) to 739 (good) in 11 months or less can help you qualify for a lower mortgage rate and save thousands of dollars, among other things. Here are some ways to improve your credit score 100 points or more in less than a year:
1) Get Your Credit Score (For Free)
FICO credit scores range from 300 to 850. If you don’t know what your score is, it’s easy enough to check at free credit monitoring services such as Credit Sesame. Signing up is free and not only will you learn what your credit score is, you’ll get a “credit report card” to see what problems are hurting your score and how to fix them.
For example, you might see bills in collections that you didn’t know existed. Or fraudsters could be opening credit accounts in your name. Learning this information can be the first step in resolving those problems.
2) Pay Your Bills on Time (and More)
Payment history is the biggest factor in credit scoring, accounting for 35% of a FICO score.
How to improve that area of your credit score? Pay your bills on time.
It sounds easy, but sometimes it isn’t. To get around having late payments drop your score, set up automatic payments through your checking account.
At the very least, make a budget so you can keep track of where your money goes and when your bills are due. We recommend using an app like TrueBill to help keep track of your bills and subscriptions.
Paying bills on time for a few months can raise your score quickly. Going from 603 to 709 is a 106-point jump, which isn’t as big as it sounds. It’s a 17% increase in your credit score. Considering that payment history accounts for 35% of a credit score, a 17% increase doesn’t sound so implausible.
A mortgage officer at a community bank wrote in a credit advice forum that their daughter raised her 533 credit score to 754 in 11 months by resolving late payments on a student loan and a medical collection of $135.
The 200+ point increase was accomplished in a few ways:
- Student loans put on automatic payments.
- Obtained a secured credit card where a security deposit is paid. A $1,000 limit was set so she could buy gas and groceries, and she paid it off monthly.
- Added to three of parent’s credit cards as an authorized user, but not allowed to use the cards. This increased her credit by 100 points.
- She paid the collection that was less than two years old directly to the creditor, not to the collection agency.
3) Use Less of Your Available Credit
You never want to look desperate. Especially to creditors.
Using more than 30% of your available credit is a sign to creditors that you’re in desperate need of money and that you’re using your credit card too much.
This is called credit utilization, and it accounts for 30% of a FICO credit score.
Use less than 30% of your available credit and your score will increase almost as much as it would be paying your bills on time.
Suppose your credit limits on all of your credit cards is $10,000. If your balances are $3,000, then you’re utilizing 30% of your credit.
But if your balances total $5,000, then you’re using half of your available credit. Creditors won’t be pleased. Your credit score will drop.
To fix it, pay off your credit cards until you get to 30% or less in credit utilization. Keep it there and in a few months, your score should rise.
Signing up for free credit monitoring with Credit Sesame can get you more tips on how to improve your credit. The two main ones we’ve detailed here account for 65% of a credit score.
Working on those should raise your score plenty in 11 months or less.
Remember the mortgage officer we mentioned above who helped their daughter rebuild her credit in 11 months? Her credit score improved so much that she received pre-approved credit offers without asking for them.
That’s a clear sign that she did something right.