How I Raised My Credit Score 150+ Points

My friend recently pulled his credit report to see where he stood. I followed my friend’s lead and pulled my credit score too.  

I only had one $800 credit card from college. For the most part, all my bills were paid on time. 

My credit score was 580 on the report……. which was an utter shock.

I thought I was responsible. I took the following steps to repair and raise my credit score.

How I Raised My Credit Score 150 Points

Step 1 – Checked my Credit Score and Report

You need to know where you stand before you even think of rebuilding your credit score.

You can check scores online for free using sites like Credit Sesame & Credit Karma. 

Other websites where you can look for your credit score are –

WebsitesData SourcePricing
MyFICOExperian, Transunion, and Equifax$15.95
Credit SesameTransunionFree
Credit KarmaTransunion and EquifaxFree also provides our entire credit report for free once a year.

Step 2- Figure Out the Area that needs to Improve

Factors that affect your credit score include –

  • Payment History – 35% 
  • Credit Utilization – 30% 
  • Length of Credit History – 15% 
  • New Credit – 10%
  • A mix of Credit Accounts – 10%

Credit mix refers to the various type of credit you have – credit cards, student loans, mortgages, auto loans, etc. 

Having diversified credit improves your credit score compared to having only one type of credit.

I was shocked to see that – there was a medical bill for a few hundred dollars showing in collections.

I didn’t even know about it.  

I immediately called the collections company to negotiate the bill.  

The company said – I could settle the account for a lower amount but the remark would still appear on the credit report.

However, they agreed to remove the remarks if I paid in full. Without wasting time, I paid the bill in full.

Step 3 – I Lowered my credit utilization rate

A fast and easy way to get a credit score boost is – to lower the amount utilized.

Use a maximum of 30% of your credit limit, which applies both to individual cards and across all cards. 

For example –

  • On a card with a $500 credit limit, spend no more than $150.
  • On a card with a $700 credit limit, spend no more than $210.
  • On both cards (a $1,200 combined limit), spend no more than $360.

Step 4 – Check and Fix Errors

Chances are that your federal loan servicer or private lender misreported your student loan payments or failed to close out an old debt.

Check your credit score for such mistakes and immediately call up your lender to get the error resolved at the earliest.

The other common inaccuracies include – 

  • The closed account shown as open
  • Outdated balance or credit limit information
  • A duplicate account with different names
  • Incorrect date of last payment
  • Incorrect date of the first delinquency

Step 5 – Increase the Available Credit Limits 

After waiting for 6-8 months, I went to the credit card company and asked for a credit limit increase. 

At first, I was denied the increase. But after asking a year later my credit limit doubled to $1600.

Your credit utilization ratio will be lower if your limit gets increased. 

I still had the $250 outstanding on my credit card and the credit limit is now $1600, so my credit utilization ratio would be 15%.  

It took over a year to increase my credit score to 700.

The important thing to keep in mind is – just because you have a higher credit limit, does not mean you have to spend additional money.

Other Actions that can Improve Your Credit Scores

#1. Start With a Secured Credit Card and Keep Your Utilization Low

Get a secured credit card and keep the utilization low if you’re trying to rebuild your score. Secured credit cards are backed by a cash deposit that you make upfront.

The deposit amount and your credit limit need to be the same. 

For example, if you pay $300 upfront, then the bank will offer a $300 credit limit with a secured credit card.

#2. Don’t miss any more payments

A single late payment can drop your credit score by 80 or more points, according to the National Association of Certified Credit Counselors.

So it is important that you pay your outstanding credit card bill well before the due date. 

Don’t wait for the last day to make payments. Chances are that you may accidentally miss the payment due date 

A better idea is to set up direct deposit in respect of credit card payments from your checking account.

#3. Pay down your debt

Pay for the purchases that you made on the card immediately. 

This will lower your limit utilization and improve your credit scores. For example, you have a $10,000 credit limit. 

If you’ve charged $5,000 on your shopping then you have a 50% utilization. 

But if you repay $2,000 immediately then your usage will be $3,000 or 30%. This will improve your score significantly.

#4. Make Sure Inquiries are Removed after 2 Years

Soft inquiries like creditors pulling your score to offer you a promotion don’t affect your credit scores. 

But hard inquiries like for an auto loan can leave a lasting impact.

Keep the number of inquiries you make – to a minimum and make sure everything falls off your credit report within 2 years. 

If inquiries still persist, then you need to contact the creditor personally to request they remove the inquiry immediately. 

#5. Don’t close paid-off accounts

Closing unused credit card accounts will reduce your available credit and can lower your credit score.

Keeping old accounts gives bureaus an indication that you are managing credit wisely. In short, long credit history improves your score.  

Bottom Line

The credit score is used by lenders before approving any type of credit. Some lenders will use both your numerical credit score and the actual information on your credit report.

Keeping a healthy score help you get a quality credit card and easier approval for rental houses. Competitive APY on personal loans and mortgages are a few perks of having a good credit score.

About Eric Walton

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