NEW YORK (MainStreet) Everyone wants to improve his credit. We're also told that there are no shortcuts, that it's a marathon not a sprint and that patience is the name of the game. While there's a truth to this, such truisms ignore a simple fact: there are methods of improving your credit score that work faster than others.
Here are some of the most effective strategies you can use to improve your credit score.
Get Current on Delinquent Accounts
Matt Schulz, a senior industry analyst with CreditCards.com, urges people to begin with getting current on delinquent accounts. "One of the biggest components of your credit score is timely payments," he says." This is a double-edged sword: on the one hand, a delinquent account can have a massive (negative) impact on an otherwise clean credit record. On the other hand, cleaning up past delinquent accounts can go a long way toward boosting your credit score in the short term.
Manage Your Credit Utilization
When you hear that you need to manage your credit utilization, that might sound a bit esoteric, but it's not; it's just how much of your available credit card debt you're using. "You want to keep your utilization under 30%," says Randy Hopper, vice president of credit cards at Navy Federal Credit Union. You can reduce your credit utilization by paying down debt, of course, but another way you can do it is a bit counterintuitive: opening a new account.
"It can be risky," says Hopper. "It shows that lenders are willing to lend to you, but you also might not get approved." He recommends getting your existing lines of credit under control first, emphasizing the risks that opening new accounts can carry.
Schulz is slightly less worried about opening new accounts to solve this problem. "You just have to know yourself," he says, "It can help your score, but some people can't resist the allure of using new credit."
Check Your Credit Report
One of the easiest ways to boost your credit score fast is just checking your credit report. "There might be errors on there you don't know about," says Schulz. According to Schulz, common errors include on-time payments listed as late as well as credit lines that you've never held before.
Getting these taken care of will not only significantly improve your credit score in short order; they can also act as first signs of identity theft.
The FTC reported that fully one-in-five Americans will have some kind of error on their credit report.
Just Ask For a Better Score
It might sound strange, but one way you can improve your credit score is to simply ask for one.
"Some places will give you a 'good will' or 'good faith' increase to your credit score," says Schulz.
While this won't help you to turn a long history of late payments and delinquent accounts around, it can be useful for people who have one blemish on an otherwise spotless record.
"You basically call a creditor and ask them to cut you a break," he says. Will it work? Maybe, maybe not.
But Shulz relies on age-old advice: "As my father was fond of saying, the worst thing they can say is 'no.'"
How Much Impact Will Any of This Have?
Of course, the question you're probably asking yourself right now is just how much impact any of this is going to have on your credit score.
"How much impact any of this will have depends on your baseline," says Hopper. "If you're a 'thin file' borrower with no history, you can get a 700 or 750 just by making timely payments."
It's not as speedy for everyone.
"On the other hand, if you have an established history and that history isn't the greatest, it's going to take a little longer," he says.
"Ask yourself how much poor history you have," he says, "It's going to take as much good history and good performance to straighten out your credit."
Still, even moving your credit score just a few points can make a big difference in how you are perceived particularly if you're moving over a number "threshold" -- for example, getting your credit score from 595 to 605, 645 to 655 or 695 to 705. While you might not be able to move your credit score 50 points in six months, just moving it 10 or 15 might make all the difference in the world when it comes to accessing the kinds of credit services and loan products you're wanting or needing.
--Written by Nicholas Pell for MainStreet