Use this FICO checklist for the best ways to increase your credit score within a few months
As someone that destroyed their credit score, I can tell you that FICO means more to your life than you might know. After my credit score dropped into the 500s, I saw my insurance premiums jump and was even turned down for a job.
I learned everything I could about increasing my credit score. I read blogs and went through credit counseling.
Now my credit score is over 740 FICO and I’m back to getting the advertised interest rate you see in commercials.
Rebuilding your credit score can be a tough process but it is absolutely worth every minute you spend. Increasing your FICO by just 30 points can get you loans with rates of a percent or two lower.
How much is your time worth?
Every percent lower on a $10,000 loan will save you $766 over ten years.
That means if it takes just 10 hours to work through some of the points on this credit score checklist to increase your score and get a rate 3% lower…you’ll have made $2,300 on the money you save in interest.
How’s $230 an hour sound?
You can print out this FICO checklist or just keep coming back to the page. I’ve detailed out the steps after the infographic to walk you through the process.
Why Having a Credit Score Checklist is Key to Boosting FICO Fast
When it comes to personal finance, many Americans make the mistake of not taking credit seriously. According to a survey from Bankrate.com, only 54% of people have ever checked their own credit score and an even smaller percentage know what their child's credit score is.
The FICO credit score is the most commonly used type of personal credit score in the United States. Anyone who is going to apply for a credit card, financial loan, or even rent an apartment should check their FICO rating. The better your rating is, the more likely you are to qualify for loans and lower interest rates as well as other great benefits from having a good rating.
It's important to note that your credit score is not the same thing as a credit report that you can access for free from AnnualCreditReport.com every year. A credit report will show you where you stand in terms of your financial activity, but it doesn't have quite as much information about what other lenders think of you and how likely they are to trust you with their money.
In addition to checking your credit report, you should also check out a FICO score from myFICO.com. The FICO score is going to be the most accurate representation of your financial history and behavior available anywhere else. You can see how your score sits in comparison to the national average as well as track any changes over time.
Getting started with credit score improvement starts by creating a checklist of items that you can review and focus on improving. It's important to note that having a good credit profile is a marathon, rather than a sprint. You won't be able to improve your FICO score from poor to excellent overnight, but if you're patient and work hard you'll see results.
Check Your Credit Report to Stay Safe and Take Action
You probably know you can get your credit report from each of the three credit bureaus once a year from Annual Credit Report but you can also get a copy if you are turned down for a loan. Either way you do it, it’s important to check your credit report at least once a year.
A new case of identity theft is reported every two minutes in America. This is no longer something you can avoid.
Remember, there are three credit bureaus and each put together a different report based on the lenders that report to them. You’ll need to check each report to make sure there are no mistakes or identity theft.
The first thing you’ll want to do is scan each of your three reports to make sure there’s nothing that is a mistake or fraud. It happens more than you think. Beyond credit fraud, which is getting worse every day, one-in-five credit reports have a mistake.
Just one reported missed payment can sink your FICO by 50 points and mean thousands more in interest.
You’ll also want to list out all the bad marks in your credit history including:
- Missed payments
- Debt that’s gone to a collections agency
- Judgements and Liens
All this will take less than an hour to work through all three reports and will be super-important for the next step.
File a Dispute with Each Credit Bureau
Your next step is going to be to file a dispute with each credit bureau on some of the bad marks. This one takes longer than most of the other steps but is going to have the biggest effect on your credit score as well.
Getting just one missed payment taken off your report can add that 50 points back on your FICO.
I’ll post the mailing addresses for the three reporting bureaus below. Even if there are no mistakes on your credit reports, you still might want to try this trick to get some bad marks taken off.
You see, credit bureaus are required to contact the creditors when you file a dispute. Many creditors, especially those with which you’ve already closed your account, aren’t going to take the time to respond to the dispute letter.
So this is an easy hack to get that payment you missed to Sears years ago removed from your report.
Here are the mailing addresses for each of the three bureaus:
P.O. Box 7404256
Atlanta, GA 30374-0256
P.O. Box 9701
Allen, TX 75013
P.O. Box 2000
Chester, PA 19022-2000
Remember, you need to dispute a bad mark on every credit report on which it appears. Getting something wiped off your TransUnion report won’t get it removed from your Equifax or Experian report.
I personally used this trick and saw my credit score jump by 65 points within three months.
Change the Type of Debt to Increase Your Score
Now we get into some of the credit score magic and this first one works on so many levels.
The people that make your credit score, FICO, use factors to determine it like your credit history and how much you owe.
One of those factors is the type of credit on which you owe, either revolving or non-revolving.
- Revolving credit is anything without a fixed payment or a fixed payoff date. These are debts like credit cards and a HELOC.
- Non-revolving credit is other types of loans like your mortgage and car payment.
Having revolving credit on your credit report will hurt your score more.
Think about this one.
Lenders want to know how certain it is you will be able to pay off any new loans. If you’ve got a lot of debt with no fixed payment and no payoff date, it makes it harder to tell if you’ll get in over your head in debt.
Having a lot of non-revolving debt isn’t going to help your score either but its better than the alternative.
So here’s what you can do.
Using a debt consolidation loan will transfer that revolving debt into non-revolving debt through a personal loan. You’ll still have to pay the money back but increasing your credit score by getting rid of your bad debt might mean you can refinance at a lower interest rate and save money.
Besides the opportunity to boost your FICO score, consolidation loans are often at lower rates compared to credit card debt and you’ll know exactly when you’ll pay off the loan.
Increase Your Credit Limit to Increase Your Score
This is the weirdest credit trick but it does work.
Another factor that goes into your credit score is something called the credit utilization ratio. That’s just a technical term for how much you owe versus how much you can borrow on your cards.
The reason this is important because it shows creditors how you have managed your debt. Someone that’s maxed out their $5,000 limit looks like a credit risk.
But that same person can call the card company to increase their limit to $10,000 and it’s a totally different story. They still owe $5,000 but it looks like they’ve been more responsible and only charged half of their limit.
I know a lot of people that have tried this and saw their credit score increase fast. You don’t have to do it just once though. Make a point of calling your credit cards once a year to get your limit increased.
Warning – this doesn’t mean you can rush out to charge more on your higher limit. That’s going to drive your credit score lower. The idea is just to have a higher limit so it looks better on paper.
Add Rent to Your Credit Report
Anyone paying rent needs to get it added to their credit report. That’s a huge payment every month and it’s doing nothing for you if it’s not being reported.
I’ve seen this one credit hack alone lift someone’s FICO score by nearly 100 points within a couple of months.
You can’t get your rent reported though, it has to go through your landlord. They can use a rent tracker like RentReporters or RentTrack that then report to the credit bureaus.
Even if you have decent credit, don’t neglect this step because it’s so easy and really works to build your credit history.
Get a Co-Signer
If your credit is so bad that you can’t even get a loan to start building your history, one option is to get a co-signer for a small loan. I say ‘small’ loan because it’s going to be more difficult getting someone to co-sign for a big loan.
Will your co-signer be responsible for the loan if you ditch? Yes. Will they be pissed off if you leave them with the loan? Absolutely!
You have to absolutely know that you can make those payments…or you don’t care about your friendship.
Get that small loan, make payments and pay it off though and you’ll have built up enough good credit that you should be able to get a loan without a co-signer in less than a year.
Become an Authorized User on Someone’s Credit Card
This is a little like getting a co-signer for a loan but less dangerous for the other person.
Ask someone with good credit to put you on as an authorized user for their credit card. That means the credit card company will report the payments and credit history on your credit report as well.
You don’t even need a copy of the card or to use it. All that is important here is that you are officially recognized as an authorized user.
I like this option much better than getting a high-interest starter credit card for people with bad credit. Those high-interest cards can put you in a debt hole fast and will do more harm to your score than good if you can’t make payments.
Become an authorized user on someone’s card and you’ll see your FICO increase within six months.
Get Tough with Creditors to Improve Your Score
Our last credit hack takes a little more negotiating and finesse but will work wonders to improve your credit score.
Your creditors don’t care what’s on your report. They just want their money. That means you can call anyone you owe and negotiate.
- Anyone to which you still owe money but have missed a payment in the past. Tell them you will pay off the account if they remove the missed payment from your report.
- Collection agencies will remove themselves from your report if you pay them off, or sometimes even if you pay off most of the money.
- Original lenders that have sent a debt to collections will often work with you to get their money and remove the collection agency from your report.
This one works so well because hardly anyone uses it.
People just naturally avoid confrontation. They accept flat-out any terms or rates on loans. They don’t negotiate with their creditors and it ends up costing them big time.
Don’t take no for an answer. Call up your creditors and keep them on the phone until they either hang up or agree to some kind of a deal. It’s your credit and your money – get the most out of it!
Are these the only credit score hacks that can boost your FICO? No but they are the ones that work the fastest and they’re by far the most effective. Use just a few of these credit tricks and I guarantee you will see your score increase at least a few dozen points within two months. That’s enough to start getting cheaper rates on loans and save thousands in interest.
Read the Entire Credit Score Series
- Is 602 a Good Credit Score?
- Which Factors Most Influence Credit Score?
- What is a Good Credit Score to Buy a Car?
- Proof You Don’t Need the Highest Credit Score for Great Rates
- 11 FICO Credit Score Myths that Will Change Your Financial Life
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.