How can I raise my credit score within 45 days?
— Borrower
A. It won’t be easy to make a significant change to your score that quickly, but there are some steps you can take.
First, there are five factors that go into determining your credit score: history of timely payments, how much you owe relative to your credit limits, length of credit history, new credit and types of credit.
Some of these factors take longer to affect your credit score than others, said Deva Panambur, a certified financial planner with Sarsi, LLC in West New York. and adjunct professor of personal finance at Montclair State University.
For example, he said, negative information on your credit history stays for seven years and bankruptcies can stay on your report for as long as 10 years or more in some cases.
“Length of credit history also takes time to build up,” he said. “When you check your credit scores, you will also get information on which of the above factors are impacting you score.”
To improve your score, the first thing you should do is credit history for any errors. You are entitled to one free credit report from each of the three credit reporting agency, once a year. You can access your credit report at www.annualcreditreport.com.
Panambur said you should pay off any credit card debt you can so that the amount you owe relative to your credit limit is low. Ideally, the amount you owe should be less than 30 percent of your credit limit, he said.
“Another way you can reduce that percentage is by calling your credit card company and if possible, increasing your credit limit,” he said.
Then, if there are any collections against you, pay them off immediately.
“Use your credit cards responsibly but do not close any unused credit card if it is not costing you any money – having fewer accounts open for the same amount of money owed can lower your credit score,” he said.
If your credit history is lean, there are now ways that you can use your history of timely payment of utility bills towards your credit history, he said. For example, the credit bureau Experian has a free service that allows you to get credit for your phone and utility bills instantaneously, he said.
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