Building your credit can make life easier, helping you qualify for loans or credit cards. You also might get lower interest rates, better car insurance rates and a chance to skip utility deposits.
Let’s say your score is 620, in the credit score range typically considered “bad credit.” If you could reach 720, which is at the bottom of the “excellent” range, lenders would see you in a very different light. Even a smaller leap — to good credit — will give you options you don’t have now.
Even if you’ve crossed into the excellent range, you might want to keep building. It’s wise to have a cushion of points rather than stay right at the border between good and excellent, because scores naturally fluctuate a bit.
Read on to find out seven things you can do to improve your credit by as many as 100 points. Not sure where you stand? Sign up today for a free credit score and see how NerdWallet can help you make the right money moves.
1. Dispute credit report errors
A mistake on one of your credit reports could be pulling down your score. Many credit report mistakes result from human error — either by a consumer or by a credit issuer. Examples: Your handwriting or a phone response may be misunderstood, leading to an incorrect name spelling; a creditor may transpose digits in a Social Security number or credit payments to the wrong account.
You can get at least one free report every 12 months from each of the three major credit bureaus: Equifax, Experian and TransUnion. Using AnnualCreditReport.com, request those reports and check them for mistakes, such as payments marked late when you paid on time or negative information that’s too old to be listed.
Then, dispute those errors to get them removed. The credit bureaus have 30 days to investigate and respond.
2. Pay down your credit cards frequently
Make small payments — often called micropayments — throughout the month to keep your credit card balances down. You can even treat your credit card like a debit card, paying online as soon as you see a purchase is posted. Making multiple payments throughout the month works on a credit factor called credit utilization, which has a big effect on scores. If you’re able to keep your utilization low instead of letting it build toward a payment due date, it should benefit your score right away. (You can track your credit utilization on each card and overall by viewing your credit profile with NerdWallet.)
3. Ask for a higher credit limit
When your credit limit goes up and your balance stays the same, you instantly lower your overall credit utilization. Call your card issuer and ask whether you can get a higher limit without a “hard” credit inquiry. Hard inquiries can temporarily drop your score a few points.
4. Become an authorized user
Ask a relative or friend with a long record of responsible credit card use and a high credit limit to add you to his or her card as an authorized user. That can fatten up your credit file, give you a longer credit history and help your credit utilization. The account holder doesn’t have to let you use the card or even disclose the number to you for you to benefit. This works best for people who have little credit experience, and the impact can be significant.
5. Keep credit cards open
If you’re racing to improve your credit profile, avoid making the job harder by closing credit cards. If you close a credit card, you lose that card’s credit limit when your overall credit utilization is calculated. That can lead to a lower score. Use the card at least occasionally so the issuer won’t close it.
6. Mix it up — credit cards and loans
If you have only credit cards or only loans, consider getting the type of credit you don’t have. Having both types of credit — called installment debt (where you have equal payments for a set time) and revolving credit (as with a credit card, where you can choose how much to pay) — can help your credit.
7. Pay every bill on time
No strategy to bump up your score will work unless you’re also paying on time. Why? Payment history has the single biggest influence on credit scores.
Late payments can stay on your credit reports for seven years. The impact fades over time, and positive information can help counter the damage even more quickly.
But, accidents happen. If you miss a payment by 30 days or more, call the creditor immediately. Arrange to pay up and ask if the creditor will consider no longer reporting the missed payment.
Even if the creditor won’t do that, it’s worth getting current on the account ASAP. Every month an account is marked delinquent hurts your score, and a 60-day delinquency hurts more than a 30-day delinquency.
Can you improve your credit by 100 points?
If you’re struggling with a low score, you’re better positioned to make gains than someone with a strong credit history.
Is a 100-point increase realistic? Rod Griffin, director of public education for Experian, says yes. “The lower a person’s score, the more likely they are to achieve a 100-point increase,” he says. “That’s simply because there is much more upside, and small changes can result in greater score increases.”
And if you’re starting from a higher score, you likely don’t need a full 100 points to make a big difference in the credit products you can get. Simply continuing to polish your credit can make life easier, giving you a better chance of qualifying for the best terms on loans or credit cards.