The fastest way to increase your credit score is to pay off outstanding balances on credit cards and loans. Increasing your credit score is all about making payments on time to creditors consistently and communicating with them when you can't pay your bills.
Pay Off Your Balances
Paying off your balances in full is the quickest and most effective way to increase your credit score.
Creditors like to see debtors keep their balances far below their maximum credit limit. If you can't pay off your entire balance, paying off enough of your balance to stay below 30 percent of your credit limit can help increase your credit score, according to MSN Money.
Pay Off Cards and Eliminate Them
Having five credit card accounts with $200 each will hurt your credit score more than having one credit card with a $1,000 balance, according to Smart Money. Credit bureaus view consumers with multiple lines of open credit riskier than those with one or two lines of credit. If you have a lot of credit cards, pay them off and only keep one or two accounts open. Having fewer lines of credit can help increase your credit score.
Communicate with Creditors
If you can't pay your bills on time, it's important to communicate with your creditors so they don't send your bills to a collection agency. If one of your debts is sent to a collection agency, it will significantly lower your credit score, according to Smart Money. If you can't pay a bill on time, tell your creditors that you plan on sending your payment in as soon as possible. Sending in your payment a few days late is better than ignoring your creditors entirely.
Pay on Time
Making your monthly payment on time helps increase your credit score. Making late payments is one of the main causes of a low credit score. Even if you only send your payment in a few days late, it can significantly increase your credit score. Myfico.com suggests setting up payment reminders with your creditors to avoid making late payments. The longer you pay your bills on time without making a late payment, the more your credit score will increase, according to Myfico.com.
Pay Off Installment Loans
Paying off installment loans can help raise your credit score, but it doesn't help nearly as much as paying off revolving accounts such as credit cards, according to MSN Money.
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