How to Raise Your Credit Score 100 Points in 5 Steps
Credit scores affect the financial lives of millions of Americans. A low credit score can lead to higher interest rates on loans, difficulty getting a loan for a home or car, and even denial of employment.
If you’re overwhelmed and frustrated at all the advice you’ve been reading online – or getting from well-meaning friends and family members – and you desperately need to raise your credit score, this is for you!
If you’re wanting to raise your credit score…whether it’s a few points or 100 points or more, we’re going to give you 5 steps to follow. The truth is, building credit is simple, but we often overcomplicate it.
Check out these five steps to raising your score.
Raise Your Credit Score 100 Points in 5 Easy Steps
If you’ve ever tried to finance a car or a house, you know that your credit score matters…and it matters big time. The higher your credit score, the more likely you are to qualify for a lower interest rate and get better deals on the things you’re financing.
And while that’s all good and well, when your credit score stinks, it can feel hopeless and frustrating. There are so many financial “gurus” out there with differing advice that it can make it hard to know what to believe and who to follow.
With all the credit score talk on the internet, it’s easy to understand why people get confused about credit. Raising your credit score can be a frustrating process, especially if you don’t understand where you’re starting or where you’re going!
Know where you’re at.
The first step to improving your credit score is to know what your credit score actually is. I feel like personal finance is one of those areas of life where we often stick our heads in the sand because we’re afraid of knowing the how bad things really are. Just like it’s important to know your numbers when you’re paying off debt, it’s also important to know your numbers where you’re trying to improve your credit score.
Using a site like Credit Karma is fine if you want to see how much your credit is improving at a glance, but if you have serious goals…like buying a house or car, you’ll need a more accurate number.
Did you know you can get a free copy of your credit report once a year from annualcreditreport.com? It’s totally worthwhile and something that you should do yearly. It’s a great way to gauge the progress you’re making and it’s also a great way to catch identity theft early.
I know it may seem impossible, but you can get your credit score to over 800…even if your score is currently in the low 400s. Even if your credit score is currently abysmal, you can raise your credit score to 750 or even 800+ in a year.
While a year may seem like a long time, in the whole scheme of things, a year really isn’t that long. If you decide to focus and are willing to make a few sacrifices, you can dramatically change your credit score in the next 2 years. And that change can radically impact your life!
Know where you’re going
If you want to improve your credit score, you need to set a specific goal. Do you want your credit score to be 750? Are you shooting for 800? Whatever that goal is, write it down and put it somewhere you can see it regularly. Add it to your dream board, vision board, or even to your phone wallpaper. I’m a big believer in putting your vision in front of you!
If your goal is an increase of 100 points or less, you should be able to accomplish it in well under a year. If you have several collections on your credit that you’re currently unable to pay off, it may take longer. The good news is, you may be able to get some of those collections removed.
Write letters and call people!
One of the best things you can do to improve your credit score is to reach out to the major credit bureaus and request your collections accounts be deleted. You should also write letters to the companies you owe money to.
Did you know that you can often request pay-off accounts from the collection companies you owe money to? Many of them will allow you to pay half of what you owe…and sometimes even less depending on the circumstances. Make sure that you have them agree in writing to remove the collections from your account once you have made your payments.
Another trick you can utilize is heading to experian.com/boost and linking your bank account. Most of the time people get an instant credit boost simply for proving they pay their utility bills every month. The best part? Experian doesn’t report negatively if they see you missed making a payment. Hooray for tools that will only help boost your score.
And while a boost of 20 points may not seems like a big deal, using little tips and tricks like this along your credit journey will definitely add up.
Pay your bills.
This may make you roll your eyes at me, but from now on you need to pay all your bills on time – every single month. If you need to set them on auto-pay, do that. A single late payment can drop your credit score by more than 40 points!
If you’re struggling financially, read my other blog posts about building an emergency fund and starting a side hustle. Who knows? Your side hustle may turn into a full-time income stream!
While this may seem obvious, the more you make, the faster you can pay off your debt. And the faster you pay off debt, the more you’ll save in interest and other fees, so do what you can to bring in extra income!
Don’t be afraid of credit cards
I know that many financial gurus tell you to avoid credit cards and for some people they can be a dreadful mistake. But signing up for credit cards while you’re repairing and building your credit can be helpful. If you struggle with overspending, you may not be ready for this step. Consider getting a secured credit card if you’re not sure if you’re disciplined enough to not spend more than you have.
If you’re serious about building your credit and becoming financially secure, overspending on a credit card won’t be tempting. Consider using it for a cheap recurring subscription each month like Disney+ or Netflix and pay the balance every single month. If you’re afraid you’ll be tempted to use it on other things, keep the card at home in your safe or give it to your spouse to hold on to. 🙂 Whether you like the idea of credit or not, utilizing credit in a responsible way is one of the easiest ways to raise your credit so you can eventually buy a home.
If you started with a secured card, but feel like you’re ready for something more, do your research. While sites like Credit Karma will offer you suggestions that they say will be a good fit for you, they’re not always in your best interest since Credit Karma earns money for referrals. Look for credit cards that don’t have a yearly fee and find ones that will give you airline miles or reward points. Use it to pay one or two bills each month and you’ll be able to earn airline miles while you’re improving your credit! Win-Win!
I can’t stress this enough…if you’re worried about being irresponsible with your credit card, set it up for ONE monthly subscription payment, then cut up that card. Make sure you’ve set up auto-pay so that your bank automatically pays your credit card each month. By doing this, you aren’t spending more money, you are just spending it differently – and earning points and building credit in the process.
Once you get accustomed to responsibly using your credit card, start paying most or all of your bills with a card that collect points or airline miles. Some cards even offer cash back rewards, which means that not only are you building your credit, but you’re also saving money which can be used for something special down the road.
The sooner you get started in improving your credit, the sooner you’ll start seeing improvement. And while every credit situation is different, you can use these helpful tips to get you started and moving in the right direction! Before you know it, you’ll have the credit score you put on your vision board!