How to Raise Your Credit Score in 60 Days

If you are in the market to buy a new car, home or other item with borrowed funds, you may have already made the conscientious effort to obtain a copy of your credit report. Perhaps you were curious what a lender would find when reviewing your credit report and wanted to be prepared, or perhaps you have already applied for credit and were told that your credit scores were too low to qualify for the best rates possible. Now that you have seen your report, however, you may be wondering what steps you can take to increase your scores. The fact is that it can take time and effort to raise your scores significantly, but it may be possible raise them a small but meaningful amount within a two month period of time. Here are a few steps to follow.

Look for Errors

As a first step, take a closer look at each line item on your report. Keep in mind that the credit bureaus often only update their records after month or so, so your account balance may not reflect your last payment made. However, the account balance should be relatively close, and your monthly payment amount should also be close. You should also ensure that all late payments and derogatory items are being reported correctly. If you spot any errors, you should take the appropriate steps to contact your creditor as well as the credit bureau or bureaus to have the false information corrected. Even an item that is not listed as derogatory, such as your outstanding balance, may play a role in your credit rating. Because of this, it is important to ensure that all information is correct. It can take a few months for the bureaus to research the disputed information and to make the changes to your report, so this process should begin as soon as possible.

Pay All Bills On Time

For the next few months, focus your efforts on paying your accounts on time. If any accounts are being reported as behind or unpaid, be sure to pay these balances off or bring them current. Then, stay up-to-date with your bills. If you have trouble remembering to sit down and pay your bills or often don’t make it to the post office in time to mail your bills off by their due date, consider the benefits of using a bill pay feature with online banking services.

Reduce Debt Balances

If possible, take time to reduce outstanding debt balances as much as possible. Your initial goal should be to bring each account balance to approximately half of the credit limit. If you have already achieved this, work to bring your account balance to approximately one-third of your credit limit. The lower your balances are, the better. If you only have a limited amount of funds available and have several accounts with high balances, focus on the accounts that are closest to reaching the credit limit first.

Avoid Applying for New Credit

When you apply for new credit, you are causing more inquiries to reflect on your credit report. You are also altering the ratio of available credit, outstanding debt and other factors that are used by the bureaus to determine your scores. These are all factors that can actually lower your scores rather than raise them. Because of this, it is best to avoid applying for new credit. Instead, focus on maintaining the status quo and even reducing your debt balances over the next few months rather than taking on new debts.

Stop Making Purchases

You should also make an effort to stop making new purchases with your credit cards and lines of credit. Your goal should be to maintain or even reduce account balances while making payments on time. Making new purchases serves to increase your account balance, and it can also increase your minimum monthly payments. Make an effort to pay cash for all of your purchases and to delay the use of your credit cards until after your scores have increased.

For some individuals, these efforts can have a rather significant impact on fico score. This is particularly true if you have many derogatory accounts that are brought current, are able to drastically reduce outstanding debt balances or can otherwise make a significant and positive change to your credit rating. Even if you can only make small changes to your credit rating, however, you should be able increase your credit rating by a modest amount by following these steps.