A good credit score can be a game-changer when it comes to managing your finances. It can affect everything from the interest rates on loans to the ability to secure a mortgage, a car loan, or even a credit card. If you’re looking to improve your credit score quickly, you might be wondering if it’s possible to make significant changes in just 90 days. The short answer is yes, with the right strategies, you can improve your credit score in three months. However, it’s important to note that the exact increase will depend on your individual circumstances, such as your starting credit score, your current financial situation, and how much effort you’re willing to put in.
In this article, we’ll guide you through proven methods to improve your credit score within 90 days, giving you the tools and knowledge needed to boost your credit health.
Understanding Your Credit Score
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Before you can take steps to improve your credit score, it’s essential to understand what a credit score is and what factors influence it. Credit scores typically range from 300 to 850, with higher scores representing better creditworthiness. The three major credit bureaus—Equifax, Experian, and TransUnion—use various scoring models, but the most common one is the FICO score. A FICO score is influenced by five key factors:
1. Payment History (35% of your score)
Your payment history is the most significant factor in determining your credit score. Late payments, defaults, bankruptcies, and any other negative marks on your payment history can have a significant negative impact.
2. Amounts Owed (30% of your score)
This factor takes into account your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit. Using a high percentage of your available credit can indicate that you’re overleveraged and might struggle to repay debt.
3. Length of Credit History (15% of your score)
The longer you’ve had credit, the better. Credit scoring models consider the age of your oldest account, the average age of your accounts, and how recently you’ve used your credit accounts.
4. Types of Credit in Use (10% of your score)
This factor looks at the different types of credit you have, such as credit cards, installment loans, mortgages, and other lines of credit. A diverse credit mix can help improve your score.
5. New Credit (10% of your score)
Opening several new credit accounts in a short period of time can negatively affect your credit score. Each new application results in a hard inquiry, which can lower your score slightly. However, it’s also a sign that you may be taking on more debt than you can handle.
Now that we have a better understanding of what influences your credit score, let’s take a look at strategies to improve it within 90 days.
Check Your Credit Reports for Errors
Before doing anything, it’s important to understand where your credit stands. The first step is to obtain your credit report from all three major credit bureaus. You can get a free copy of your credit report once a year from each bureau through AnnualCreditReport.com.
Go through each of your reports carefully to identify any discrepancies or errors, such as:
- Accounts that don’t belong to you
- Incorrect account balances
- Payment history errors
- Closed accounts listed as open
- Duplicate accounts
If you find any errors, dispute them with the relevant credit bureau. The bureaus are legally required to investigate and correct inaccuracies within 30 days. Correcting these errors can result in an immediate improvement in your credit score, especially if you’re dealing with significant mistakes.
Make Timely Payments
Your payment history is the most critical factor in determining your credit score, so making timely payments is key. One missed payment can drop your score by 50 to 100 points, depending on how recent the missed payment is and other factors in your credit report.
If you’ve missed payments in the past, focus on making sure that you don’t miss any further payments going forward. This might sound simple, but it’s vital. Here are some strategies to help you stay on track:
Set up Automatic Payments
Many credit card companies and lenders allow you to set up automatic payments for at least the minimum payment. This ensures that you never forget to make a payment.
Use Payment Reminders
If you prefer not to set up automatic payments, use reminders on your phone or calendar to remind you when a payment is due. Many banks also offer reminders via text message or email.
Prioritize Delinquent Accounts
If you have accounts that are overdue or in collections, make paying those off a priority. Delinquent accounts can cause significant damage to your credit score, and settling them will improve your creditworthiness over time.
Pay Down High Credit Card Balances
Credit utilization—the amount of credit you’re using relative to your available credit—makes up 30% of your credit score. The lower your credit utilization ratio, the better. Ideally, you should aim for using no more than 30% of your available credit on each individual card.
If you’re carrying high balances on multiple credit cards, it may be worth focusing on paying them down to improve your score. Start by paying down cards with high-interest rates, as this will not only help your credit score but also save you money in the long run.
Here are a few strategies to reduce your credit utilization:
1. Pay More Than the Minimum
Paying just the minimum balance on your credit card won’t make a significant dent in your debt, especially if you’re only paying down interest. Try to pay more than the minimum required.
2. Make Multiple Payments Each Month
Rather than making one payment at the end of the month, try making two or three smaller payments throughout the month. This will lower your balance more quickly and reduce your credit utilization.
3. Transfer Balances
If you’re struggling with high interest rates, consider transferring your balances to a credit card with a lower rate or even a 0% interest introductory period. This can help you pay down your balances faster without accumulating high interest.
Avoid Opening New Credit Accounts
While it might be tempting to open new credit cards or loans to increase your available credit and improve your credit utilization ratio, opening new credit accounts can have the opposite effect in the short term. Every time you open a new credit account, a hard inquiry is made on your credit report, which can temporarily lower your credit score by a few points.
In the 90-day period, avoid opening new credit accounts unless absolutely necessary. Focusing on managing your existing credit is the best approach for boosting your score.
Negotiate with Creditors
If you have past-due accounts, creditors may be willing to work with you. Negotiating with creditors can be an effective way to improve your credit score. If you’ve fallen behind on payments or have accounts in collections, here are some strategies you can use:
Request a Goodwill Adjustment
If you’ve made mistakes in the past but have since been paying your bills on time, consider asking creditors for a goodwill adjustment. This is where they remove late payment marks from your credit report as a gesture of goodwill, especially if you’ve been a loyal customer.
Settle or Pay Off Debt
If you have accounts in collections, you may be able to negotiate a settlement or a payment plan. Settle for less than what you owe if you’re unable to pay the full balance. Just be sure that the creditor reports the account as “paid as agreed” or “settled” to the credit bureaus.
Keep Old Accounts Open
One of the factors in your credit score is the length of your credit history. The longer you’ve had credit, the better it is for your score. Therefore, it’s important not to close old accounts, even if you don’t use them often.
Closing accounts can shorten your credit history and increase your credit utilization ratio, both of which can negatively impact your score. Unless there’s a compelling reason, keep your old accounts open, even if you’re not using them actively.
Become an Authorized User
If you have a trusted friend or family member with good credit, consider asking to become an authorized user on their credit card. Being an authorized user allows you to benefit from their good credit history, which can help boost your score without needing to open a new credit account.
Make sure that the primary account holder has a positive payment history and keeps their credit utilization low. If they miss payments or carry high balances, it could hurt your credit score instead of helping.
Monitor Your Progress
Finally, it’s essential to monitor your credit regularly as you work to improve your score. Use free credit monitoring tools to keep track of your score and receive alerts about any changes to your credit report. This will help you understand what’s working and identify any potential problems early.
Many credit card issuers and financial apps offer free access to your credit score, which can help you track improvements over the 90-day period.
Conclusion
Improving your credit score in 90 days is an achievable goal, but it requires commitment, organization, and patience. By following the steps outlined above, such as checking for errors, making timely payments, paying down debt, and avoiding new credit inquiries, you can make significant improvements to your credit score in a relatively short amount of time.
Remember, the goal is to build good habits that will continue to benefit your credit score long after the 90-day period has passed. By staying disciplined and focused, you can set yourself up for financial success and unlock the benefits of a better credit score for years to come.