What’s the secret to increasing your credit score?

You know that your credit score can stand to be improved a little bit. You’ve probably seen a lot of people online talking about how they went through the same experience with great success.

What exactly did they do? Is there key information that you don’t know about?

Truthfully…the answer is probably YES.

It may not be talked about a lot, but there are some very powerful methods to safely raise your credit score RIGHT NOW.

You’re going to love this infographic. Take a look!


1) Remember Report Dates, NOT Due Dates

This is one of the most under-the-radar tricks we learned about…and it can be pretty powerful.

Every creditor has an official “Report Date.” This is when they send the information about your account with them to places like FICO and the three credit bureaus.  More often than not, the report date (aka closing date) is before the payment due date on your account. This means that they will report a higher account balance for that month than what is necessary…and this may lead to a lower credit score!

To take advantage of this tip, you will need to call each creditor and ask for their official monthly report date. Create a list of these dates and keep them handy. Then, all you have to do is make sure you make your monthly payment prior to each report date (instead of by the due date on your statement). This will ensure that the lowest possible balance for each of your accounts is reported each month. Score!

2) Pay Your Credit Cards Twice a Month

It’s extremely important to use as little of your allotted credit as possible each month. If you’re trying to pay off your balance each month, but still want to ensure that your balance is as low as possible before the creditors report date, you’ll want to make payments twice a month.

The benefit of this strategy is threefold:

  • Decrease the amount reported to credit bureaus
  • Avoid interest or fees
  • Pay balance off monthly

Let’s illustrate this so you can see how it works:

Imagine you have a credit card with a $1,000 dollar limit. You use this credit card to pay $800 worth of utilities, and pay it off by the due date on the 29th of every month. This is all fine and dandy until you realize that the credit cards closing date is the 17th of the month and they’re telling the bureaus that you’re holding balance of $800 each month.

Ahh! That’s no bueno.

By paying twice a month, you can make a payment before the reporting date on the 17th to ensure the lowest balance possible is passed along to the agencies. Then, you can pay off the rest of the balance by the 29th to ensure you’re not paying any interest or fees. Viola!

3) Audit Credit Reports & Dispute Obvious Errors

Before we get too far ahead of ourselves, it’s worth it to note that you should know the current status of you credit. The way to do this is to obtain your FREE credit reports from each of the bureaus (Equifax, Experian, and Transunion) by visiting AnnualCreditReport.com.

Once you have obtained your free reports, you will want to perform a comprehensive audit of them to make sure that all of the data is accurate. Make sure to check for things like:

  • Incorrect personal information (address, phone number, etc.)
  • The number and types of open credit accounts
  • Any accounts that may currently be in collections
  • Recent hard and soft credit inquiries

If you find that any information on your credit reports are incorrect, you can easily fix them by contacting the bureaus or the creditor directly. We wrote a comprehensive guide on this (click here to read it).

Correcting errors on your reports is one of the single easiest ways to quickly raise your credit score.

4) Decrease Your Credit Utilization

Credit utilization (aka Debt-to-Credit ratio) refers to the amount of credit you are using compared to your total credit limit.  The percentage of credit that you’re using is your credit utilization rate and it has an extremely high impact on your FICO score.

It’s actually a very good indicator of lending risk.  If you’re constantly charging up your cards to the max limit and taking a very long time to pay them off, then you probably shouldn’t have those cards in the first place.

Use this formula to determine your Credit Utilization Rate:

Total Credit Debt / Total Credit Limit = Credit Utilization.

Let’s look at an example.

John Doe has 3 credit cards. The limits of these credit cards are $1,000, $8,000, and $2,500. Combined, his total credit limit is $11,500. He has charged $300, $3,565, and $1,600 on each of those cards, respectively. This gives him a total debt of $5,465. When John divided $5,465 by $11,500, he arrives at his credit utilization of 48%.

Most experts agree that your utilization rate should be no higher than 30% of your total credit limit. In order to achieve an excellent score, it’s likely that you will have to use 20% or below.

Follow these steps to lower your credit utilization:

  • Lower your interest rates
  • Increase your credit limits on existing cards
  • Stop acquiring new debt
  • Pay down current debt, starting with accounts that have high interest

Get started on this one right now. You can’t climb a mountain without taking that first step…

5) Pay All Accounts on Time

This may go without saying, but paying your bills late will have a negative effect on your credit score. In fact, your payment history accounts for over 30% of the formula that makes up your total score.

A single late payment could affect your financial standing for months to years after the fact.  Additionally, there are other penalties you may incur such as late fees, increasing interest rates, and a negative mark on your reports. So, it is in your best interest to ensure you’re paying your bills by the due date.

In a perfect world, you should only being charging amounts that you can pay off in full each month. Doing so is a clear indicator that you are a low-risk individual that has the ability to pay their bills in full each month. This results in a higher score and the ability to take out more credit in the future.

If you happen to have a big ole’ stack of bills burning a hole on your desk, it’s time to start chipping away at that headache. Start with the oldest bills first and work your way to the most recent. Older balances may have a bigger impact on your score than newer ones.

If any of them are in danger of being sent to collections, make sure you contact those creditors and let them know that you intend to pay them off ASAP. This may delay them sending your account to collections.

6) Negotiate With Your Lender

Everyone runs into a little trouble sometimes and may end up with an account or two in collections. This is no reason to accept a poor FICO score! As an astute personal finance hobbyist, you can easily negotiate a pay for deletion agreement with your creditors.

To begin this negotiation, simply write a letter to the account in collections that states you will pay the debt off in full immediately, as long as the account is reported “paid as agreed” to the reporting agencies. Some people may even try to haggle their way into having the account in question removed from their report altogether.

It’s essential to note that you should keep very good records during the negotiation process. NEVER pay off the account in full until you have your agreement in writing.

7) Increase Your Credit Limits

We’ve already talked about the benefits of a low debt-to-credit ratio and mentioned that increasing your credit limits can be a good strategic play for your score. But, how do we accomplish this?

Well, if you have had your card for 6 months or more without any late payments or negative marks, it’s likely that the company will simply raise your limit for you unannounced. If you don’t happen to receive this automatic increase, all you really need to do is pick up the phone and request one. It’s as simple as that.

Increasing your limit shouldn’t be hard if you pay your bills on time. Just make sure to build your case.  Tell the representative that you speak with about your long standing payment history with no late payments. Let them know if you recently received a raise at work. Be honest about how you plan on using the limit increase and how you plan to pay any new purchases off.

There shouldn’t be any reason NOT to increase your limits if you have been in good standing for the past six months to a year. However, being denied a limit increase is a great way to find out about a possible problem before it snowballs into a headache. If you’re denied a limit increase, always find out why and correct the issue as soon as possible.

Seriously, this is a major credit score raising tactic right here. Spend the 5 minutes and get this done!

8) Become an Authorized User for a Family Member

If you have a trustworthy family member in good financial standing, it’s possible that you can “piggyback” on their credit in order to improve your FICO score.  All you need to do is become an authorized user on their account. This is especially helpful for anyone who has little to know credit history and is looking to build up their good standing quickly.

To accomplish this, simply get a family member to agree to allow you to be an authorized user on their account. They should have had the account open for at least two years. Then, draft a letter to the creditor to put the agreement in writing. Make sure to define what percentage of the account you’re allowed to use and whether or not you’re responsible for payments on any of those purchases.

With great power comes great responsibility. Don’t wreck your family member’s financial standing with poor spending decisions. Only use this credit line to make small purchases that you can pay off in a month or less. You’ll see positive changes to your credit reports fast!

9) Don’t Close Unused Credit Card Accounts

So, you’ve paid down that debt on an old credit card that you’ve had since college. Congrats! That’s an awesome achievement. But…what do you do with it now?

Well, you most certainly do not want to close this account. Credit cards are a type of revolving debt – the type of debt that varies each month based on new purchases made and payments submitted. The amount of revolving debt that you carry plays a role in your credit score.

We already know that we want a low credit utilization, and this is specifically true for revolving debt. By keeping old credit card accounts open with a low (or zero) balance, you are accomplishing two very important things:

  • Decreasing your debt-to-credit ratio
  • Maintaining a long credit history with a single account

Your credit history length makes up to 15% of the factors that go into determining your score. This means that maintaining your accounts in good standing for as long as possible is essential for a great score.

The takeaway here is to never close unused credit card accounts. Either put them away in your safe at home or use them for small purchases (utilities are great for this) that you can pay off completely everything 30 days.

10) Use a Secured Credit Card

If you’re freaking out because you have no credit history and can’t seem to get approved for any type of loan or credit card, all you need to do is obtain a “secured” credit card.

The way a secure credit card works is simply. You prepay your credit ahead of time to “secure” all of your purchases. Your credit limit for this type of card is exactly the amount of money that you prepay. This basically makes you a zero risk debtor to the bank if you happen to not pay your bill. You can obtain a secured credit card for as little as $200, so there really isn’t any reason to NOT get one.

The key here is that you have to use these cards responsibly. Pay all of your purchases of within 30 days, never miss a payment, and keep your running balances as low as possible. If you do this for a few months, you will have built up enough credit history to be eligible for other types of credit accounts with higher limits.

11) Get a Gas Store Card

Aside from a secured credit card, a credit line from your favorite gas station can help you increase your credit score as well. These types of gas credit cards are very easy to obtain and can help establish your credit history quickly.

Here are a few options:

Always keep in mind that you should pay off these balances in full at the end of each month!

12) Ask for a Good Faith Adjustment

Everyone makes mistakes from time-to-time, which is exactly why “good faith adjustments” exist today. If you consistently pay your bills on time and happen to miss one or two payments for good reason, there is a great chance that you can have those marks removed from your credit reports in good faith that this won’t be a recurring issue.

Take fifteen minutes and draft an honest letter to your creditor that explains the reason for your late-payment. Make sure you cite your long-standing history of on-time payments. Here is a great example.

If the late-payment is removed from your reports, you should see an instant boost to your credit score!

13) Hire a Professional Credit Repair Service

These services often catch a bad rap, and certainly aren’t for everyone. However, there is something to be said for the years of experience and insider knowledge these businesses have. Those people who are in a good financial standing and need some help increasing their score without all the headaches of doing it on their own can benefit greatly from such a service.

CreditMarvel has gone ahead and provided comprehensive reviews of the most popular and trusted credit repair companies around right now. They all have their strengths and weaknesses, so you should pay close attention to the features that each company can offer you. Right now, we feel that Sky Blue Credit is the most well-rounded service.

14) Pay Recent Charge-Offs First

Charged-off accounts will most definitely have a negative effect on your score. Paying a charge-off that is 2 years old (or older) will actually do nothing for your credit score. However, any accounts that were charged-off within 24 months can still be paid off in exchange for a boost to your score.

Since you have your credit reports already, simply sit down and make a list of any charge offs that have shown up. List any of the items under 24 months in age by their amount. Make sure to pay them off by largest to smallest.

Once paid, you should see these items removed from your reports in a few months. If not, you can always write a letter requesting that they be removed.

15) Avoid Hard Inquiries

A hard inquiry happens when a financial institution takes a look into your credit history to determine whether or not you are in a good position to take on a loan. These inquiries typically take place when you are trying to obtain a significant loan or credit line such as a mortgage, auto loan or credit card. Each inquiry drops your credit score by a few points and remains on your reports for up to two years.

Here are a list of hard inquires to look out for:

  • Applying for any type of loan, credit card, or mortgage
  • Applying for an apartment rental
  • Identity verification via a credit union
  • Getting a cable or internet account

There are, however, such things as “soft inquiries”. These include background checks and checking your own score. A soft inquiry will do nothing to your score, regardless of how many you have.

16) Shop for Loans Quickly

The length of your credit history makes up 15% of your credit score. The number of new accounts opened in a given timeframe makes up a whopping 10% of that number!

Every time that you inquire about taking out a new loan, you’ll receive a hard inquiry on your report. However, most credit bureaus treat several inquiries for mortgages or similar loans as a single inquiry.

The trick here is that you need to batch all of these inquiries into a single two-week period in order to enjoy this benefit. There is a new scoring formula that expands this period to 45-days, but has not yet been adopted by all lenders and bureaus. For now, it’s best to shop around for the best interest rates within 14 business days to avoid an unnecessary decrease to your credit score.

17) Report Your Card Lost or Stolen

This is a semi-secret tactic that the credit bureaus don’t really want you to know. Whenever a card is lost or stolen, it’s likely that your creditor will immediately close the old account and transfer all the data to a new account – including all of the history and opening date.

This means that you’re getting two separate trade lines with the same payment history and duration simply for reporting the card lost or stolen. If the original account was in good standing with a positive payment history, it’s likely that you’ll see an improvement in your credit score quickly.

18) Take Out a Credit Builder Loan from a Credit Union

A credit builder loan is just what it sounds like; an installment loan that exists to build the credit of any individual. They usual range from six to eighteen months in duration and are reported to Experian, Equifax, and Transunion. Regular on-time payments of these types of loans will do wonders for your credit score.

The way these work is simple. A credit union will set up a savings account in your name for the amount of the loan. Every time you make a payment, the funds get sent to your savings account. Once you make your final payment, you gain access to all the funds in the savings account. How cool is that!

These types of loans don’t have to be for big bucks either. Most credit builder loans can be as small as $500, so you won’t have to worry about breaking the bank in order to build your credit.

19) Add MIA Accounts

If there was ever such as thing as a guaranteed credit score booster, this would be it. If you find that one of your accounts is not being reported to the credit bureaus, you can request that it be included. Make a list of all the bills you pay for every month. We bet there’s a lot. Here’s a common list:

  • Cell phones
  • Internet services
  • Medical Bills
  • Utilities
  • Insurance payments

These types of billing accounts aren’t required to report your transactions to the credit bureaus. However, a kind request to do so may yield positive results in the form of a brand new, positive credit line on your report! What’s even better is that the bureaus will acknowledge the history of your account – which is fantastic for your score.

20) Leave Good Debt on Your Report

People often believe that any type of sign of debt on your reports is a bad thing. This could not be further from the truth!

Instances of debt that has been paid on time without any late payments prove your trustworthiness. This means that old auto loan or mortgage that has been paid off should not be removed from your credit reports. They’re positive indicators that will help your credit score!

After you audit your reports, make sure that you make a list of all your current (or old) credit accounts that are in good standing….and don’t do a thing to them! The longer this debt remains on your reports, the better it is for your score.

21) Transfer Balances Among Cards to Optimize Utilization

This is a cool trick that will help you optimize your credit utilization rate. While we already know that we want to keep our utilization percentage below 30% of our total credit limit, it is also important to keep that percentage low on each credit card.

So, if you have one card that has a utilization of 10% and another that has a utilization of 43%, it is in your best interest to initiate a balance transfer from the card with the high utilization to the card with the lower utilization if you can get both cards underneath 30%

Most cards offer free balance transfers anyway, so there really isn’t any reason not to do this! Get started right now!

22) Attach 100-word Statements to Negative Marks

If you happen to find yourself in collections for a specific debt, you are actually allowed to attach a 100-word explanation to your credit report explaining what happened.

Everyone runs into trouble at some point in their lives. You may have lost a job or had an unexpected emergency that caused you to be delinquent in your payments. A statement allows you to tell your side of the story, especially if the negative mark is heavily in the grey area.

Submitting and attaching a 100-word explanation to this account will allow all potential creditors to see that you are on top of the issue and it’s unlikely to happen again in the future.  Just be sure to be 100% truthful, or you may come off as trying to twist the facts.

Both Experian and Transunion allow multiple statements on their reports. Equifax allows 1 statement per report.

23) Pay Your Rent Online

A positive credit payment history is the most important part of your overall credit score. As a renter, your rental payments are likely your largest monthly payment, and the one that you most likely pay on time consistently. So, you should do everything you can to let the credit bureaus know about your good standing with your landlord.

At least one bureau now takes your rental payment into account when calculating your reports. Experian has even gone and explain why and how your rental payments are used. You can read that FAQ right here.

Paying rent online is a relatively new concept and most landlords may not know services like this exist yet. Companies like RentTrack and RentalKharma provide a great service to landlords while allowing renters to successful report their on-time rental payments to the credit bureaus.

Get Started Immediately!

Here’s a quote that we think may resonate strongly within you:

“Do what today others won’t, so tomorrow, you can do what others can’t.” ~ Brian Rogers Loop

There really is no time like the present to start improving your credit score. Any single strategy listed above has the potential to put you in a much better financial situation.

If you feel overwhelmed, just tell yourself to take this process one step at a time. After you have completed several of these methods in a month or so, you will be grateful that you put the effort in and helped improve the quality of life for yourself and your family.

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