Building your credit can make life easier, giving you a better chance of qualifying for loans or credit cards. You might get lower interest rates, better car insurance rates and a chance to skip utility deposits.

Can you improve your credit by 100 points?

Let’s say your score is 620, in the range typically considered “bad credit.” If you could reach 720, which is at the bottom of the “excellent” range, lenders would see you in a very different light.

“The lower a person’s score, the more likely they are to achieve a 100-point increase,” he says. “That’s simply because there is much more upside, and small changes can result in greater score increases. It’s harder to improve scores when you already have a strong credit history.”

Bear in mind that there are no overnight solutions. Time can erase many negatives on your credit report — but only if you make smart choices in the meantime.

Knock the errors off your credit reports

You get at least one free report from the credit bureaus each year: Equifax, Experian and TransUnion.

According to the Federal Trade Commission, about 5% of consumers have errors on their credit reports bad enough to result in a higher price for a financial product or insurance. About 1 in 4 reports contain errors that might have at least a small, negative effect on consumer scores. If you see mistakes, dispute them.

“If a collection account recently showed up on your credit reports that shouldn’t be there, you should see a big jump in your scores when you get it removed,” says NerdWallet columnist Liz Weston, author of the book “Your Credit Score.”

Pay your bills on time, all the time

If you’re among the 5% of people with serious errors on your credit report, correcting them may help your score a lot. But if you’re not?

“After checking for errors, look for any accounts that might be past due,” advises Bruce McClary, spokesman for the National Foundation for Credit Counseling. “Payment history accounts for more than a third of the credit score, so keeping accounts up to date is vital in order to maintain the healthiest rating.”

Bringing an account up to date won’t undo the damage from past missed payments, so it’s still important to pay your bills on time. Missed payments stay on your credit report for seven years, and the more recent the delinquency, the worse it is for your credit scores.

“A single skipped payment can knock more than 100 points off a good credit score,” Weston says. “The formulas don’t really distinguish between a bill you can’t pay and one you forgot to pay.”

Don’t go anywhere near your credit limit

After your payment history, your credit utilization — that is, the amount of your credit card balance relative to your credit limit — has the biggest impact on your score. McClary says it’s best to keep balances to 30% or less of your credit limits.

If you have a bunch of maxed-out credit cards, you could elevate your scores by nearly 100 points by paying them all off, says John Ulzheimer, a credit score expert who has worked at FICO and Equifax. You wouldn’t have to wait long, either: Card issuers report balances to the bureaus every month.

“If you went from 100% utilization and 10 cards with balances to 0% utilization and zero cards with a balance, you would see the increase” 30 days or in less, he says.

 

 

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