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Raising your credit score by 20 points, 100 points, or even 200 points fast are major objectives for those looking to obtain more credit with lower interest rates.This article won’t tell you how to increase your credit score to 800 immediately, but it will help you raise your credit score by 20 points fast. We’re going to provide you with actionable tips that can help you move into a better credit score range and enjoy faster credit approval, higher credit limits, and lower interest rates.
- An increase of 20 points can take your credit to a whole new level, from fair to good, good to very good, and very good to excellent.
- Increasing your credit score can make you more desirable to lenders.
- Some strategies can help you boost your credit score quickly, but you still need to maintain good habits to ensure your improvement lasts.
Fastest Ways to Increase Your Credit Score 20 Points
Time is money, and that includes credit and credit scores. The faster you can raise your credit score, the sooner you can get approved for that new credit you’re seeking, whether it be a personal loan, student loan, mortgage, or preferred credit card.
To help you improve your credit standing, follow these tips for quickly increasing your credit score.
1. Dispute errors on your credit report
Finding and disputing errors on your credit report can significantly boost your score. Lenders often make data entry errors, and they can be costly to you in terms of your credit.
These errors are often related to the following:
- Identity theft: Unfortunately, identity thieves are constantly on the prowl to steal information that they can use to apply for credit under your name (Social Security number, driver’s license number, home address, etc.), which can wreak havoc with your credit report and cause your score to plummet. Report identity theft immediately to your creditors so they can put a hold on your account and prevent further damage to your credit while they investigate the matter.
- Mistaken identity: Sharing the same name with thousands of other people can cause their credit information to get mixed in with yours and add accounts to your credit report that you don’t own.
- Incorrect account status: You may find your account status inaccurate, such as saying the account is delinquent or was written off as uncollectable. This information can easily cost you 20 points. The fact that you reported it to the credit bureau will appear on your credit report and may help sway a lender's decision before the matter is officially cleared up.
- Account balance: Adding one or two more digits to your account balance can lead lenders to believe that you’re using too much credit in relation to your credit limits or income. One error entered concerning your account balance can lead to a quick drop in your score.
- Data management: Also known as “human error.” With everyone scurrying to do more at work in less time, people keying in information make mistakes. Unfortunately, this can come back and cause problems with your credit score.
Just one mistake in your credit report can drop your score 100 points or more. Finding and correcting that error will take time, but your score can go up as much as it fell once the correction is made on your credit report.
If you are struggling with substantial amounts of debt, a debt relief company such as Freedom Debt Relief could be your lifeline. The company can help you save 15-35% of your total amount owed.
2. Lower your credit utilization
Many people haven’t heard about “credit utilization,” yet it accounts for 30% of your credit score. Credit utilization is the percentage of your credit limit that you’ve used. For example, if you’re credit limit is $10,000 on a credit card and your balance on the account is $4,000, your credit utilization rate is 40%. The goal is to have a utilization rate under 30%.
Here are several ways you can do that.
- Pay off your credit cards. The lower your credit card utilization rate is, the better the impact on your credit score. The average utilization rate for people with a perfect credit score of 850 is 3%. Paying your cards off and paying your balance in full does wonders for your credit score.
- Increase your credit limit on an existing card. If you can’t lower your balance on a credit card, request an increase in your credit limit. It will lower your utilization rate. If you have a very good or excellent credit rating, you should have no problem getting a bump in your credit limit.
- Apply for a new credit card. Though you may experience a slight, temporary decrease in your credit score by applying for a new credit card, it will be more than offset by a lower utilization rate. But be sure not to apply for multiple cards at once, which will lower your credit score. Lenders sometimes see someone applying for more than one card at a time as a credit risk.
3. Become an authorized credit card user
Sometimes, getting a helping hand from a friend or family member with good to excellent credit can help your credit score. Here are some finer points of becoming an authorized user.
- Ask a family member or friend with a good track record of on-time payments to be added as an authorized user on one of their credit cards. They don’t have to give you a card; they just add you to the account.
- That card’s on-time payment history could help you boost your credit score, even if you never personally use it. With your name on the account, their good credit management will pay dividends for you, too.
- Note that some credit scoring systems may not give authorized user accounts as much weight because you aren’t responsible for paying the credit card bill when it arrives. The person the card’s name is under bears that responsibility.
4. Take advantage of a credit-builder loan
With a traditional loan, you receive the money you’re borrowing upfront and pay it back over time. The opposite is true with a credit-builder loan.
- With a credit-builder loan, you make fixed payments to a lender and then get access to the loan amount at the end of the loan’s term. It seems backward to get your money after you pay the loan off, but it’s a proven strategy that works.
- You could see a 60-point increase in your credit score within a few months. Of course, there’s no guarantee that will happen, but it has for some people with credit-builder loans.
- Credit-builder loans may be more helpful for people just starting to build credit than those with existing debt already affecting their credit. However, if you already are using credit and your score is poor or fair, it will take more time than someone with no credit cards or loans.
5. Pay off collections accounts
It’s disheartening to fall behind on your payments, but lenders lose money when you don’t make payments on time. If they send your account to a collection agency, respond to their request for payment. You have several options at that point:
- Negotiate a payment plan. Let them know you can pay something each month, even if it isn’t your original monthly payment amount.
- Ask to settle the account for a cash discount.
If you have any collections accounts on your credit report, try to pay them off as soon as possible. Even if the account is closed, paying it off can help to improve your credit score over time.
6. Make all of your payments on time
Paying on time is the best way to raise and maintain your credit score.
On-time payments account for 35% of your credit score. Being even 30 days late can cause a significant dip in your score. If you’re struggling to pay your bills on time, talk with your creditors before they put negative information in your report and work out a different payment arrangement.
You can use Experian Boost to add more on-time payments, like your rent and streaming video services to your credit report, which can boost your credit score by 20 points fast. It’s free and can make a quick difference in your score within a few weeks since credit reports are updated at least once a month.
How Can You Maintain Your Progress?
After taking steps to improve your credit score, you don’t want to see it drop back down to where you started after all the effort you’ve put in. However, there are habits you can develop that will help you maintain the credit score you’ve worked so hard for, including:
Always pay your bills on time. Life is busy, and time can get away from us, leaving bill payments to take a back seat. Use autopay and have your bills paid on the same day every month if you need help staying on track.
Constantly monitor your credit utilization. You can do this by checking your credit score monthly. All three credit bureaus are required to give you your credit report annually. To help you remember, put it on your calendar and order it on the same day every year.
Apply for new credit sparingly. Applying for multiple credit cards or loans simultaneously will lower your credit score and be a red flag to lenders. Lenders get concerned when someone is requesting credit from several banks or lenders at the same time because it can be an indicator of financial difficulties.
Keep your oldest accounts and credit cards open. Do this even if you never use them. Older accounts help to maintain the length of your credit history, which is an important consideration to lenders evaluating your credit.
How Long Does It Take to See a Change in Your Credit Score?
There is no set time for how long it will take to see a change in your credit score. You could see a 20-point increase in a month, or it could take longer. Credit scores are updated at least once a month.
You can keep tabs on your score and progress through:
- Bank or loan statements. If your score isn’t listed on your statement, call your lender and ask them to give you your score. They will almost always help.
- Free scores provided by credit bureaus. The three major credit bureaus, Experian, Equifax, and TransUnion, will provide you with a copy of your credit report and credit score once a year at no cost.
- Free annual credit reports. Use AnnualCreditReport.com to get your free annual credit report with your score. Because of the financial impact of the pandemic, you can get your report once a month through the end of 2023.
What Causes Your Credit Score to Decrease?
Watching your credit score drop can be very discouraging and troubling. There are several reasons this can happen.
Hard credit inquiries. Also called “hard credit pulls,” Experian tells us these inquiries can ding your credit score, temporarily, by five points. Instead, ask if a potential lender will make a “soft credit inquiry, which won’t hurt your score.
High credit utilization. It can be tempting to pull out your credit card just for the sake of convenience. Most people’s paychecks are made via direct deposit, and the person it’s payable to never sees the inside of a bank to keep some cash. But, using your cards too much can hinder your quest to improve your credit. Keeping your credit utilization rate below 30% is your goal. Maxing out a credit card is 100% utilization, which is a credit score killer.
Late payments. Some people believe a late payment or two won’t hurt their credit. The truth is that a 30-day missed payment can cause your credit score to drop as much as 63 to 83 points, which can cause a very good or excellent credit score to drop down to a lower range.
Closing accounts. Your credit score can drop when you close an account because it negatively impacts the length of your credit history, which is an essential factor in a lender’s decision to loan you money or extend you credit.
Who Needs to Increase Their Credit Score?
Unless your credit score is a perfect 850, there’s room for improvement. When it comes to increasing your credit score:
- Your credit score is an important part of your financial health. Anyone can improve their score with some effort, and you can probably do it yourself. If you need help, check into non-profit credit counseling agencies.
- It takes a focused effort to build credit or improve a poor to fair credit score. All good things take time. Be consistent by paying your bills on time every month and reducing your credit card balances.
- Bettering your credit score will get you better loan terms and make a better impression on landlords and employers. They have more trust in someone who manages their finances responsibly, including credit.
How Hard Is It to Improve Your Credit Score by 20 Points?
Improving your credit score by 20 points is easier than improving it by 100 points, but it will still take time and effort.
- It’s relative. Someone whose score drops because of one missed payment may have an easier time repairing their score than someone who has poor credit due to significant debt. It depends on their overall credit report.
- Credit isn’t built overnight, nor is it repaired that quickly. A 20-point increase isn’t like moving a mountain, but it may take at least four weeks or longer after you’ve followed some of the previous pointers.
Does It Cost Money to Improve Your Credit Score?
Depending on your strategy, it may or may not cost you money to improve your credit score.
- Some strategies will. Paying down your credit cards or paying off a credit-builder loan will require you to write some checks as an investment in improving your credit.
- Other strategies won’t. Reducing your credit utilization or becoming an authorized credit card user is free.
How to monitor your credit score
In addition to taking steps to improve your credit score, it's important to keep an eye on it over time. The element of human error by lenders sometimes comes into play as data is being entered into credit reports. You can monitor your score by
- Using a credit monitoring service. In addition to keeping track of your credit score, you’ll also be informed if there is any activity concerning identity theft.
- Check your credit reports regularly. You're entitled to a free copy of your credit reports every month in 2023 from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com.
Is it worth the effort to improve your credit score by 20 points? Absolutely. A 20-point hike does a lot for your credit score. Try some of the tips you’ve just read, like paying down your card balance, not closing old accounts, and reviewing your credit reports regularly to spot and report errors. A 20-point increase won’t happen overnight; everyone’s timeline for improvement will vary based on their financial situation.