What's the fastest way to boost my credit score?
For most people, the fastest way to improve your credit score is
to pay down your credit-card balances.
About one-third of your FICO score (the score most lenders use)
is based on your credit-utilization ratio, which is the total of
your credit-card balances divided by the total of your credit-card
limits. It's how much you've charged that counts -- regardless of
whether you pay your balance in full each month. A good target is
to use 20% or less of your available credit; a lower percentage is
"One of the common complaints we hear from consumers is they
feel their scores are inappropriately low -- in the 600s -- even
though they have never been reported late on any credit account,"
says Craig Watts, of FICO. "Such people almost always have high
balances -- and commensurately high utilization rates -- on several
credit cards, and that lowers their scores."
An example at FICO's Score Simulator (at
) shows how a hypothetical customer with a FICO score of 707 could
raise his score to as high as 777 by reducing his balances on all
revolving accounts by 90% to 100% over 24 months. This example
takes into account the benefits of keeping accounts open longer,
but paying down balances faster could improve your score almost as
much. "How fast a lower balance can be reflected in one's score
really depends on the lender," says Watts. Many lenders send data
updates to the credit bureaus once a month. "Depending on where
your account payment falls in your lender's data-reporting cycle,
your new balance could show up on your credit report within several
days -- or it can take several weeks to appear."
You can also improve your utilization ratio by increasing your
available credit: "If you have never missed a payment and are a
good customer, consider asking your creditors to increase your
credit limit on the cards you use," says Maxine Sweet, of credit
bureau Experian. "But beware of the temptation to charge more just
because you can."
Closing unused accounts, on the other hand, could hurt your
utilization ratio because you will be lowering your available
credit. If your card company starts to charge an annual fee --
which many are doing now -- then it may still be worthwhile to
close the account and take a temporary hit. Just don't open or
close accounts or make dramatic changes in the way you use credit
within three to six months of applying for a mortgage, auto or
other loan whose terms are based on your risk, says Sweet.
Correcting any mistakes in your credit report can also improve
your score quickly, especially if you report the errors to the
credit bureau online. Disputes must be processed within 30 days,
but they are usually settled faster. You can get your credit report
free from each of the three credit bureaus once every 12 months at
. And you can get your credit score for $7.95 to $9.95 when you
order your free credit report (these are not FICO scores, but
they'll show you where you stand). Or you can get your FICO score
and a TransUnion or Equifax credit report for $15.95 each at
And don't forget the best way to maintain a good credit score:
Pay your bills on time. Missed payments will become less
significant over time, but will count as a negative for the full
seven years they remain in your credit history, says Sweet.
Credit Education site
has a lot of helpful information about credit reports and