Finances can be an embarrassing topic, especially during hard times, but know that your financial situation doesn’t define you. Taking control of your credit often starts with learning how to improve credit score.
Since credit can be complicated and confusing, we have made this ultimate guide to simplify it. By the end, you will know what a credit score is, why it matters, and 15 ways of how to improve your credit score overnight.
What is a Credit Score?
Your credit score is calculated by a scoring model algorithm that compiles all your accounts and payment history into a single number. There are two main scoring models in the US: FICO and Vantage.
90% of lenders use FICO scores, while many free online services like CreditKarma use Vantage.
Tips: If you want to know the credit bureau and score model a lender uses, call them up! They would typically tell you the info; then, you can make sure you have all your ducks in a row before you apply.
How is the Score Calculated?
The FICO algorithm uses over 100 data points to calculate your credit score and risk. However, there are five main factors you need to keep in mind.
- Payment History (35%): is the percentage of your payments that have been on time. Since this accounts for 35% of your score, even a single late payment can significantly impact your score.
- Amounts Owed (30%): is how much of your available credit is in use. The lower, the better, so high credit card usage can reduce your score here. The amount owed is also called credit utilization ratio or revolving credit ratio.
- Length of Credit History (15%): is the average age of all your open accounts. Most people mix this up with the age of your oldest account. Although your oldest account is part of your credit length, it’s not the same as your credit length.
- New Credit (10%): is how many of your accounts have been recently established. Be careful here! Too many new accounts in a short timeframe will reduce your score because it will reduce your average age and add to your hard inquiry, which adds to your risk indicator.
- Types of Credit (10%): also known as credit mix, is the variety of accounts you have on your credit report. You can improve this factor by at least one account in each type of account – credit card, car loan, mortgage, etc.
These two credit factors below are not part of the typical chart because they don’t add to your score but subtract from your score if you have them.
- Derogatory Marks: are accounts or items on your report that have a negative status. For example, collection, charge-off accounts, tax liens, or bankruptcy.
- Hard Inquiries: are hard pulls of your credit report by lenders you applied for a debt.
Now you’ve learned about the main categories of a credit score. Take a look at your credit factors and review the areas you need improvement.
On Credit Karma, the color codes tell you the grade of each credit factor. Here’s how it’s broken down:
| Color Code | Red | Orange | Yellow | Light Green | Dark Green |
| Grade | F | D | C | B | A |
Remember that even significant improvements in your credit habits can take a long time to impact your credit score, so be prepared for your credit journey to be a marathon and not a sprint.
Tips for Student Loans: A single late payment on a student loan counts multiple times! So it is important to make on-time payments, especially for student loans.
The Importance of a Good Credit Score
Having a good credit score can be the difference between mortgage approval or denial, flexible insurance options or not, a high limit credit card with a tier 1 card, or a low credit card with a credit builder.
We’ve provided some reasons why you would want to consider having an excellent credit score. You may already know some of these reasons, so it may just be a friendly reminder.
Better Chance of Credit Approval
Credit cards, mortgages, and loan approval are likely to be within reach if you have a good credit score.
It is much easier to get approved for unsecured debts like a personal or business loan, consolidate debt, or get approved for an auto loan or mortgage without a cosigner.
Lower Interest Rates
Getting approved for credit is one thing, but how favorable are the rates? A good credit score helps with debt affordability since you wouldn’t have to pay the extra interest dollars that someone with a lower score would.
Better Insurance Rates
A lower credit score is correlated to higher risk. So, insurance companies typically hike the rates for those with a lower than someone else with a similar insurance need and a higher credit score.
Saving money on your car insurance premiums is a practical reason many people decide to get their credit score in shape.
No Extra Down Payments or Deposit
Lower or no down payments are another benefit of improved credit. For those in the rental market, deposit requirements are often one of the most significant setbacks.
The rental agency typically requires a higher deposit for those with a lower score. Having a good score can save you money over time.
Higher Apartment Rental Approval Odds
During a preliminary background check for a rental, you don’t want to be losing out on a great place just because of your credit score.
Most property buildings like apartment complexes carry out an initial background check on each applicant because landlords want to know that you will pay rent each month.
Higher Credit Limits
Credit companies will be more generous with a higher limit credit card when they know that you’re more likely to pay them. The same concept applies to credit limit increase requests.
A high limit card or line of credit is great to have because if you experience tough times like a costly month, you may still be able to keep your utilization under 30% to prevent your score from dipping.
Better Job Prospects
In addition to some of the main financial benefits of improving your credit score, potential employers often do a credit check as part of the recruiting process.
It means that with better credit scores and improved financial awareness, you are more likely not to have a job offer rescinded in the future.
How to Improve your Credit Score Fast
Now that you know how scores work and the benefits of having a higher score, let’s talk about how to improve your credit score.
Some methods are quicker than others, so we will first start with the fastest results.
1. Pay Past Due Accounts
Having one 30 days late can decrease your score, and the older the account is past due, the more the decline. Once the account is over 180 days, it goes into collection.
The easiest way to not have any of your accounts past due is to sign up for automatic minimum payments for all of your accounts.
You can check your payment status and your worst payment status for each account if you have a credit monitoring service like Experian or Credit Karma.
✅ Best for:
Everyone who has a debt and wants peace of mind not worrying about when their payment is due.
⚠️Watch Out for:
You only need to pay the minimum payment and not the entire balance in full, especially if you’re on a limited budget. So don’t get pressured into the latter.
2. Have a Friend Add You as an Authorized User
If you have a trusted family member or friend with a 100% payment history, less than 15% credit card utilization, and an account that’s older than your credit age, ask them to add you to their card as an authorized user.
The account history will be added to yours in about a month and may give you the extra boost you need.
✅ Best for:
Anyone who wants to add more history or account to their profile has a reliable friend or family that will not carry a high balance or have a missed payment.
⚠️Watch Out for:
It is worth noting why most people consider this a double-edged sword.
If your friend or family member runs into a rough patch and can’t make their payment on time because of personal circumstances or carry a high credit card balance, the late payment will reflect on your report and lower your score.
Before you’re added to the account, make sure the account does not have any late payments or high utilization for the life of the account.
3. Buy a Tradeline
Buying a tradeline is the same concept of adding you to an authorized user account. The main difference is you go through a tradeline marketplace to purchase the tradelines for sale for a fee.
Some people may not have family members with an excellent 760+ credit score or feel comfortable asking friends to add them to their account, so that’s where buying a tradeline comes in.
Since these tradeline platforms vet the sellers on their platform before the tradelines are listed, you wouldn’t have to worry about the account not meeting the requirement.
Based on our data, the average points increase from buying a tradeline is 30-40 points. Some people see results as high as a 100 and a few with no credit score increase.
The key is to purchase a tradeline that will improve three or more of your credit factors.
✅ Best for:
Since it is a paid service, this strategy is best for those looking to make a major purchase like a car or home in the next three months.
The lower interest rate associated with the extra boost from the tradeline will be worth the cost over time.
⚠️Watch Out for:
It can be tricky to know the right tradeline to improve your credit factor. So, try using the tradeline calculator to see where you stand.
How would you feel if you could accomplish your target score goals in as little as 30 days instead of in several years?
4. Pay Down Your Credit Cards
Keeping your credit cards below 10% utilization at any point during the month is the number one thing to do if you want to improve your credit. It’s the difference between credit scores in the mid 700s and 800s.
It is important to mention that it isn’t enough to pay off your balance before the statement date. If your card’s limit isn’t high enough, try to request for a balance increase or only use it for small purchases like groceries or gas so you can stay within the 10% limit.
✅ Best for:
People with high credit card usage and have some extra funds to pay down their balance.
⚠️Watch Out for:
If you pay down your balance, make sure the extra payment does not put a strain on your budget that will prevent you from making your regular payments on time.
5. Request for a Credit Limit Increase
You may like the idea of paying down your card to reduce your utilization; however, you’re low on funds. Increasing your crediting limit on your primary tradeline is another way to reduce your credit card usage since your balance will be divided by a higher number in the denominator.
For example, if your balance is $1,000 and your limit is $2,000, your credit usage is $1,000/$2,000 = 50%. However, let’s say you applied for a credit limit increase and are approved for an additional $1,500.
Your new usage on the original balance will be 33% i.e $1,000/($2,000 + $1,500) = $29%. So without making any extra payment, you would have reduced your usage from 50% down to below 30%.
However, it is worth noting that ‘hard inquiries’ can affect your overall score and should be avoided where possible.
As long as you avoid hard inquiries where you can, increasing your credit limit should increase your score to improve. It can instantly lower your credit use, therefore increasing your overall credit score.
✅ Best for:
This strategy is excellent for everyone looking to increase their limit over time without applying for new credit.
However, it’s most beneficial to those with high credit card usage and who do not have extra funds to pay down their balance.
⚠️Watch Out for:
If you request a credit card limit increase, ask to make sure the lender does a soft pull of your credit report and not a hard pull since soft credit pull does not add to your hard inquiries.
6. Build a Credit History
It’s a misconception that only young adults may not have a credit history. Adults from minority and immigrant communities often do not have a credit profile because they pay their bills with cash or check.
While paying bills with cash or check is not an issue, it becomes an issue when you finance a car or home and have no credit history.
So, if you’re in this category, start building your credit history before you need it because it will take several 4-6 months to establish a high enough score for a favorable rate.
Here’re some ways to build your credit history.
- Get the Experian Instant Score Boost
- Add Your Rental History
- Get a Buy Now, Pay Later (BNPL) Loan
- Consider a Credit Builder Card
7. Get the Experian Instant Score Boost
Experian is one of the big three credit bureaus in the U.S.
They came up with a program to help people without credit history or those with limited credit history to have their regular bills and utility payments added to their credit report.
You’ll have to connect your bank account and they’ll pull the payment from your transaction history.
✅ Best for:
If you have no credit history, setting up Experian instant score boost should help you add to your credit history.
⚠️Watch Out for:
Experian Boost only adds history to one of the three credit bureaus.
Also, you only get the account history while you’re on the program and not the entire history of the utility account.
Are you looking to boost your score? Tradelines may be a viable option.
8. Add Your Rental History
Adding your rental history to your credit report has become a popular option if you have little or no credit history. The longer you’ve rented, the better since it can report your entire rent history to your credit report.
✅ Best for:
Renters that do not have a score or have less than five total credit accounts should use these options to start racking up that credit history.
⚠️Watch Out for:
Like Experian Boost, your rental history typically only adds history to either Transunion or Equifax.
So if you’re applying for a mortgage where they take your middle score, or you need to apply for credit and use a different bureau than the rental history is reported to, try a tradeline instead.
9. Get a Buy Now, Pay Later (BNPL) Loan
BNPL loans have increased in popularity because of the flexibility they offer.
Instead of paying for a large purchase on a credit card with compound interest accruing from day one or not being able to afford the purchase, consumers can finance their purchase at checkout and have equal payment options for typically up to 12 months.
Historically, BNPL loans do not show up on a credit report. However, starting in January 2022, Equifax will be the first credit bureau to include such loans on a consumers’ credit Equifax report.
✅ Best for:
People with no credit score or less than five accounts on their profile.
⚠️Watch Out for:
When these loans start reporting on Equifax, you may see your score go up or down.
Moving forward, any late payments on the loan will report on your Experian report, so sign up for automatic minimum payments, so you don’t forget to pay your bill on time.
10. Consider a Credit Builder Card
Credit builder cards are starter cards or tier 3 cards that offer people with no credit history or low credit score to build up their credit. Popular credit builder cards include Self Lender and Chime.
Credit builder cards are considered high-risk compared to standard credit cards, so if you have the option to apply and qualify for a tier 1 unsecured card, you should go that route.
✅ Best for:
A credit builder card can effectively build a credit history for people who have no credit.
⚠️Watch Out for:
Prepayment penalties! Also, if you already have a credit history, getting a credit builder account could drop your score or make it harder to increase your score since it’s a subprime card.
To combat this issue, try using a tradeline.
11. Monitor your Credit Reports and Check for Errors
A great way to continue to improve your credit score is to monitor your reports for inaccurate data. According to the CFPB, one-third of Americans have inaccurate information on their report.
You’ll want to check your report monthly for common inaccurate data that plague many Americans.
For example, an account showed up as late when the lender received the payment on the due date. If you plan to make a major purchase, check your report weekly, so there are no surprises when you’re ready to apply for credit.
✅ Best for:
Everyone is looking to maintain and continue to increase their credit score.
⚠️Watch Out for:
Disputing inaccurate data on your report takes time to resolve. Credit Bureaus have around 30 days to investigate a customer inquiry from when they receive the request.
So if you need to make a significant purchase and the inaccurate data is reducing your score, it could cause a delay in your plans.
12. Fix Fraudulent Data on Your Report ASAP
You’ll also want to check your report monthly for credit activities you didn’t request, such as a new hard inquiry or a name or address that does not belong to you.
Unfamiliar activities are typically a sign of identity theft.
If you find any such activity, start the process to dispute the information from your credit file sooner rather than later.
You may have to file an FTC identity theft report, the equivalent of an online police report, to prove you don’t know who opened the fraudulent accounts on your profile.
✅ Best for:
Victims of identity theft or those with unexpected accounts on their report and you want to continue to raise your credit score.
⚠️Watch Out for:
Resolving identity theft issues take time, so the sooner you can identify those accounts and start the dispute process, the better.
13. Keep Old Accounts Open and Active
Your credit account age accounts for 15% of your credit score and the history of that account also counts towards your payment history.
You’ll want to use your account to make a small purchase like gas or grocery to keep your account active.
Dormant accounts don’t have any credit activity on the card in the last six months, and the lenders can close an account for inactivity.
✅ Best for:
This strategy is perfect if you already have one or more accounts greater than nine years old. If you don’t have an old account, buying a tradeline could be a great alternative.
⚠️Watch Out for:
Your credit card company will send snail mails or emails about inactivity. Sometimes, they send letters in the mail with a warning notice of closing your account if you don’t use it.
Accelerate your effots with an authorized user tradeline.
14. Limit Credit Applications
Reducing the number of credit applications you apply for and only applying for an account when you need it will help maintain your score.
Also, if you do need to apply, spacing them in 6 months increments will help maintain your score because your profile will look less risky than a similar profile with multiple new accounts in a single month.
✅ Best for:
People who do not need to apply for new credit quickly.
⚠️Watch Out for:
Avoid opening several new accounts in a short time. The new account will add a hard inquiry to your report for each credit application.
When the new account shows up on your report, it will reduce your average credit age, and your score could take a dip.
15. Reduce Installment Debts with Savings
When you have a new installment loan, your balance to the total debt is high. An option to help improve your credit score is to pay down your debt with your savings.
You’ll also have an added benefit of saving some money on the interest dollars of the loan, whether it’s a personal loan, business loan, or mortgage.
✅ Best for:
This is a great option when you have a high installment balance and have funds available to pay down the debt.
⚠️Watch Out for:
Paying off your balance is great, but try not to do so at the expense of not making future regular payments on time.
Frequently Asked Questions to Improve Your Credit Score
Summary – How to Improve Credit Score in 30 Days
Improving your credit score plays a significant role in looking for a home, car, apartment, and even applying for jobs.
Start with baby steps such as setting up all your debt on automatic minimum payments and limiting your credit card use to 10% of the limit.
Then, start working on the 15 ways we outlined above to improve your score based on the state of your credit report.
If you have a lot of negative accounts on your profile and the dispute process seems daunting, seek help from a credit repair organization.
However, if you already have less than two collection accounts on your profile and all your accounts are on time, then a tradeline might be your next best step.
Learn how tradelines work to see if they’re a good fit for you and try our tradeline calculator to see where you stand.