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By Martha C. White
November 17, 2020
Kiersten Essenpreis for Money

If you’re gearing up to borrow money for a car, home, or another big purchase, you already know how important it is to have a good credit score.

What’s less clear, usually, is how to boost that score if you need money ASAP, and your current one leaves you with a less-than-ideal interest rate.

It’s a tricky feat, to be sure. But it can be done.

Your credit score has five components, and while all five are important, only one can be changed quickly.

The biggest component, which comprises 35% of your score, is payment history — building or maintaining a track record of on-time payments can take years. Three of the four remaining components are length of credit history (15%), the mix of credit you have (10%), and the amount of “new” credit you’ve opened (10%) — all of also which hinge on the passage of time.

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Which brings us to the final component: Credit utilization ratio, or how much money you owe compared to your total available credit. This comprises 30% of the scoring formula and is your window of opportunity for a quick fix.

In other words, unless you’ve never had credit before, the fastest way to raise your credit score is to pay down debt.

“If you already have a credit score and are carrying balances on your credit card accounts, reducing your debt can give your score a quick nudge in the right direction,” says Bruce McClary, spokesman for the National Foundation for Credit Counseling.

As a rule of thumb, you never want your credit utilization ratio to go over 30%—if you have one credit card with a $10,000 limit, and you owe $1,000 on it, your credit utilization ratio is 10%—but if your goal is to quickly raise your score, try to get that number down as low as you can.

It’s hard to say exactly how much the change will impact your individual score, but in general, the more debt you pay off the better. (Online credit score simulators can give you a good idea of how many points you can expect to gain.)

One caveat is this advice primarily applies to revolving debts like credit card balances. If you pay off and close out an installment loan, for instance, you lose that available credit — which could actually drop your score.

You can further improve your utilization ratio by increasing your available credit limit. If you have good credit and a track record of on-time payments, call your credit card company and ask to boost your limit. It’s also worth checking to see if your credit report is up to date, since late payments, bankruptcies, and other black marks aren’t always removed as quickly as they’re supposed to (seven years for most infractions, 10 years for certain types of bankruptcies). If you discover this to be the case, file a dispute with the credit bureau to have the out-of-date information removed.

If you consistently pay your bills on time, you also could look into Experian Boost. This free service through credit bureau Experian lets you add charges that aren’t traditionally included in credit scoring calculations, like cell phone and Netflix bills, into your payment record. Experian says the service adds an average of 13 points to a user’s credit score, which could be enough of a boost to snag better terms or a lower interest rate from a lender.

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Advertiser Disclosure

Money has partnered with CardRatings.com and ConsumersAdvocate.org, among other companies, for our coverage of credit card products. Money, CardRatings.com, and ConsumersAdvocate.org may receive a commission from card issuers. For example, Money receives a commission from Citi when you apply and are approved for a Citi product through the links on this site.

Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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