How to Raise Your Credit Score by 150 Points or More in the Next 30 Days

Every 30 days creditors will report up-to-date information about your account to the three major credit bureaus like clock-work. So by taking a few simple steps, you can dramatically increase your credit score in just one month. Each of the seven actions that I am going to suggest will take no more than a few hours to take care of. By doing these things, you could raise your credit score enough to where it makes a difference between getting a 7% mortgage and a 6% mortgage, whether you get a job or not, whether or not you get approved for a small business loan or whether or not you can rent an apartment.

Step One: Bring all of your accounts current

35% of your credit score is based on your payment history. Having any late accounts on your credit report currently will dramatically lower your score. There isn’t an exact number as to how much this will raise your credit score by, but it is weighted much more than other parts of your total score. Some suggest that doing this will raise your credit score by up to 60 points instantaneously.

Step Two: Pay all of your accounts within 30 days of the due date.

Conventional wisdom says that if you pay your bills late that you will hurt your credit, but the truth is that only paying bills more than thirty days late will hurt your credit. In terms of your credit report, every account will have a 30 day grace period before a ding shows up on your credit report. You’ll still have to pay the late fees to your bank or creditor, but it won’t hurt your credit score unless you’re -really- late.

Step Three: Pay down “revolving credit” balances

30% of your credit score is based on how much of your credit that you actually make use of. Your credit score has nothing to do with how much debt you have relative your income, rather how much debt you have relative to your total available credit. If your debt to available credit ratio is 35% of less, you’ll maximize this aspect of your credit score. Typically, this ratio is calculated only using credit cards, home equity loans, and other lines of credit. Mortgages and car loans typically won’t be calculated in your debt to available credit ratio, so focus on your credit cards to improve this aspect of your credit score.

Step Four: Raise your credit limits

As mentioned previously, a good chunk of your credit score is based on what percentage of your available credit that you make use of. If have $10,000 in available credit and are making use of 35% of that, and are able to raise your credit limits to $15,000, you’re then only using 23.3% of your available credit. Although it doesn’t make a ton of sense logically, doing this will raise your score according to Fair Isaac’s credit scoring model (FICO).

Step Five: Don’t close paid off accounts

When you pay off one of your credit cards and decide that you’re done with it, do not close it. 15% of your credit score is based on the length of your credit history. By closing old accounts, those credit cards won’t count toward helping your credit score after a specified period of time. This will make you look like you have less credit history than you actually do, lowering you score. It will also increase your debt to available credit ratio since your total available credit is lower. If you leave a card open and only make two small purchases on it per year, the bank will continue to report that you are paying “on time as agreed” and your credit score will be raised.

Step Six: Don’t apply for new credit unless absolutely necessary.

Having a high credit score is not an instant guarantee that a creditor will give you a loan. Sometimes creditors will look at how many credit inquiries you’ve had in the last three to six month period and how many new accounts you have opened recently. Having too many fresh inquiries will lead potential creditors to believe that you are trying to rack up a ton of debt and have no intention to pay it off.

However, if you are shopping for a mortgage and look for loans at multiple banks, you don’t have to worry.  FICO has recently added this into consideration into their model and know that you really are only looking for one loan and simply shopping around. Fair Isaac has made it so that all requests for a mortgage loan in any 30 day period will be seen as one request for credit.

Step Seven: Balance out your types of debt

Fair Isaac bases 10% of your credit score based on the types of debt that you have. If you have too much of one kind of debt, your credit score might get dinged. Creditors typically want to know that you can handle a wide variety of different types of debt. You shouldn’t go buy a house, get a business loan, or go finance a new car to raise your credit score, but take that into consideration when you’re making future purchases and know that doing those things might improve your score.