How to Raise Your Credit Score Fast

By Brandon Cornett | 3/11/09
© 2011, All rights reserved

The pitch usually goes like this: “We can help you raise your credit score fast so that you can qualify for auto loans and mortgage loans. Best of all, you only have to pay a small up-front fee…”

Nonsense. If you ever encounter an offer like this one, run the other way. Nobody can raise your credit score but you. The so-called credit repair companies are mostly scams. Don’t believe me? Here’s what the government has to say about it. While you’re at it, you might want to do a Google search for “credit repair scams” and see what you come up with. I got more than two million results when I searched that phrase. I rest my case.

So I’ll say it again. You are the only person who can raise your credit score, and with the right guidance you can raise your score fast and for free. But before you can do that, you must understand what makes up your credit score. And with that being said, I present you with a graphic I created for the Home Buying Institute website:

By the way, your FICO credit score is the one most commonly used by lenders. That’s why it’s the focus of the scoring chart above. So look at that chart and tell me what you see. First of all, you’ll notice that the majority of the pie (65%) consists of only two things — payment history and amounts owed. Here’s what those two things mean:

Payment History — This refers to the way you’ve paid your bills over the years, particular your loans and credit accounts. Have you always paid on time, or do you have a history of missing payments? Have you ever had an account sent to a collection agency? These things account for 35% of your credit score. So if you want to raise your credit score fast, you need to make sure you pay your bills on time. I know you’ve heard this before — now you’re getting some visual reinforcement to back it up.

Amounts Owed — This refers to the amount of debt you currently have, particularly in the form of credit card debt. The industry term for this is “credit utilization ratio.” How much of your current credit limit are you using? That’s your utilization ratio. If I have a credit card with an available limit of $4,000, and my balance is $2,000, then I’m using half of my limit. So in this scenario, my utilization ratio is 50% … which is not very good.

There you have them. The two fastest ways to improve your credit. If you want to raise your credit score for free, you can start by paying down your card balances. At the same time, you should make all of your payment on time. It takes time and discipline, but it’s not complicated. You don’t need to pay anybody for “credit repair.” In fact, it’s a waste of money to do that. You can do it for yourself.