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How to Improve Your Credit Score in One Month

One of the most frustrating things about your credit score is how easily it can drop and how hard it is to bring it back up. You can hurt your credit with realizing it, then be stuck at a lower score for months or even years. Is there a way to improve credit score in one month? Can you improve your score by 100 points quickly?

The answers to those questions are yes and maybe, respectively, but only in a couple very specific circumstances. Keep reading to find out what they are.


Five Parts of Credit Score

The exact formula that determines your credit score is a well-kept secret. Luckily, many smart people have been able to figure out roughly what affects your credit score and broke it down into these five categories:


What is credit utilization?

Your credit utilization ratio is how much credit you’re using vs. how much credit you have available. The lower the ratio, the better it is for your score. Funnily enough, a utilization ratio of 0 actually has a slightly negative effect on your score. If you pay off your cards every month (like you should be doing) then all you have to do to circumvent this is not pay your credit card bill early. By waiting for the statement, you’re allowing the credit card company to post your usage to Equifax and TransUnion. Once it’s been reported, you can pay it off – the utilization will have been recorded.


What’s special about credit utilization?

Credit utilization is the only aspect of your credit report that has no memory. A missed payment can remain on your report for years. A hard credit inquiry will affect your score for a few months. But a high credit utilization ratio only affects the month where that ratio was reported. If you have high utilization one month but pay it off the next, your utilization drops and your score improves. As you can see from the picture, your utilization has a big effect on your score – it accounts for nearly 30% of it!


The Magic 30% Utilization Ratio

A lot of bloggers and websites agree on keeping your utilization under 30%, which is supposedly the magic cutoff between a “good” ratio and “bad” one. That isn’t the case.

Nearly every credit product you can get is only offered if the lender believes you will repay them. The only exception to this is a secured credit card, which is nearly impossible to get rejected. Someone with a great credit score and high income is more likely to get a high credit limit than someone with low income and poor credit. Therefore, the amount of credit you receive is at least somewhat related to your ability to pay it back.

30% is a good number to keep utilization under only because a lower ratio is better and 30% is a manageable amount of debt for most people. Using 100% of your available credit not only shows you’re probably in a difficult financial situation but could also mean you’re paying hundreds of dollars a month in debt repayment.

Bringing your utilization down by any amount will help your score. It doesn’t have to be brought down below 30% – and if it’s already below 30%, there’s still room for improvement. In America, people with credit scores of 800 (similar to a score of 850 in Canada) use 7% of their available credit at any one time. Carrying a large balance on your credit card doesn’t help your score: it hurts it!


How to manage utilization while still using credit

So let’s say you have a high utilization ratio but intend to pay off as much as possible. That’s a good first step – committing to fixing it.

What should you do if you need to use your credit card in the meantime? If you can’t afford to pay off your entire balance at once but still need to buy things like gas and groceries, should you stop using your credit card?

Not necessarily. Instead of waiting for your statement to come in and then make a payment, you can make a payment at any time. While I don’t recommend paying off your card immediately if you have 0% utilization, if you’re trying to get it down then paying as soon as you use it is a great idea.

First, you’ll have to make sure you don’t spend more than you make. That’s why you’re in credit card trouble in the first place. You can do this by tracking your monthly expenses using our money tracking spreadsheet so you can see where your money is going and when you should stop spending.

Second, be sure to make two monthly payments – one two weeks before your statement date, and one on your statement date. Be sure to, at the very least, pay off everything you spent. Once you’ve paid off what you’ve spent, look in your budget for any extra money and throw it at your credit card. This has two benefits: it will lower your utilization by the time the statement arrives, and you’ll pay less money in credit card interest.


Will cancelling old cards improve my utilization?

No – in fact, it could end up hurting your score. Check out our blog on things you should consider before cancelling an old card.


Are there any other ways to raise my credit score quickly?


Well, technically. A good credit score is the result of months or years of responsible credit use. One mistake can cause your score to drop by a lot, and then you’ll have to work at building it up slowly over time.

But what if the mistake wasn’t yours, but the credit bureau’s? Or perhaps you were the victim of fraud? If you score drops because of the actions of someone else, you can talk to the credit bureaus and have the offending entries removed.

Keep in mind that only works if there are, in fact, fraudulent or mistaken activities on your report. Missing a credit card payment by one day probably won’t show up on your report. Missing a credit card payment by over 30 days definitely will. And it’s not very likely that missing a credit card payment by over 30 days is a mistake.

If there is fraudulent activity in your name, you probably won’t know about it until you apply for credit and see that your score is much lower than you thought it was. Since ID thieves use your identity to take out credit products that you never see, you won’t notice any of your money missing. If you don’t check your score regularly, you won’t be aware of any skullduggery.

That’s why it’s important to check your score at least once a month. But just getting your score isn’t enough – it doesn’t tell you why your score is what it is. Getting a credit monitoring service, like Credit+, will give you both your score and report every month and alert you if anything changes. That means even if you forget to check it, you’ll be alerted if something fishy happens.

Getting fraudulent activity removed will have a positive impact on your score, but requires you to have already been a victim of fraud.  The only way to build up your score if your problem is missed payments is to keep paying your bills on time and in full. It won’t be quick, but you will see results.

Chris Chris 01/26/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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