Personal Finance

How to Improve Your Credit by 100 Points in 3 Steps

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

Let’s say your score is 620, in the credit score 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. Even a smaller leap — to good but not quite excellent credit — will give you options you don’t have now.

Even if you’re in the excellent range, you might want to keep building. It’s wise to have a cushion of points rather than stay right at the border between good and excellent. That’s because scores naturally fluctuate a bit, and businesses set their own requirements for scores. Generally, if you have a score north of 800 and disposable income to support payments, you are treated like royalty.

Read on to find out how to improve your credit by 100 points in 3 steps. Not sure where you stand? Sign up today for a free credit score and see how NerdWallet can help you make all the right money moves.

1. Knock the errors off your credit reports

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 scores.

Most credit report mistakes result from human error — either by a consumer or by a credit issuer. Examples: You apply for credit using your full name and a nickname; a creditor transposes digits in a Social Security number or credits payments to the wrong account.

You can get a free report every 12 months from each of the three major credit bureaus: Equifax, Experian and TransUnion. Using, request those reports and check them for mistakes, such as payments marked late when you paid on time or negative information that’s too old to be listed.

How fast does it work? Credit bureaus must respond to disputes within 30 business days. Once incorrect negative information comes off your reports, your scores should benefit.

What’s next: Once you’ve fixed errors, keep an eye out for any new negative marks. You can check your credit report and score with NerdWallet as often as you’d like, and your information is updated weekly.

2. Stay well under your credit limit

Your credit utilization — that is, how much of your credit limit you use — has a big impact on your score.

Both overall and per-card utilization count. Here are ways to manage it:

  • Make multiple small payments — often called micropayments — during the month to keep balances down. You can even treat your credit card like a debit card, paying online as soon as you see a purchase is posted.

  • Ask for a credit limit increase. When your limit goes up and your balance stays the same, you instantly lower utilization. Call your card issuer and ask whether you can get a higher limit without a “hard” credit inquiry. Hard inquiries can temporarily drop your score a few points.

  • Tackle balances on the cards with the highest utilization first. Maybe a tax refund or other windfall could help. Sometimes it doesn’t take a lot of money, especially on low-limit retailer cards: A $250 payment on a $300 limit card will make a big difference.

  • Move some debt. A debt consolidation loan could let you reduce or eliminate card balances, lowering your utilization. Getting a personal loan at a better rate than your credit cards have also could save you money in interest.

How fast does it work? Credit card issuers typically report to the bureaus every month. As soon as your creditor reports your lower balance, the better utilization will be reflected in your scores.

If you maxed-out credit cards, you could elevate your scores by nearly 100 points by paying them down or off, says John Ulzheimer, a credit score expert who has worked at FICO and Equifax.

What’s next: Set up text or email alerts from your card issuer when your balance is nearing a limit you set. See your per-card and overall utilization — and check all your credit factors — whenever you want with NerdWallet.

3. Make sure you’re current on payments

No strategy to bump up your score will work unless you’re also paying on time. Why? Payment history has the single biggest influence on credit scores.

But, accidents happen. If you miss a payment by 30 days or more, call the creditor immediately. Arrange to pay up and ask if it will rescind the reported delinquency so it no longer appears on your reports.

Even if the creditor won’t rescind a previous missed payment, it’s worth getting current on the account ASAP. Each month an account is marked delinquent hurts your score, and a 60-day delinquency hurts more than a 30-day delinquency.

Missed payments stay on your credit report for seven years but you can start counteracting the effect right away: Focus on paying every bill on time from here on out, so you’re offsetting those negative marks with more recent positives.

How fast does it work? This one might not be fast, but it’s essential. Because scores depend heavily on payment history, you won’t make much progress unless you pay on time.

What’s next: Sign up for due-date reminders from your credit card issuers. You want to extend and protect your streak of on-time payments.

Can you improve your credit by 100 points?

If you’re struggling with a low score, you’re better positioned to make gains than someone with a strong credit history.

Is a 100-point increase realistic? Rod Griffin, director of public education for Experian, says yes. “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.”

And if you’re starting from a higher score, you likely don’t need a full 100 points to make a big difference in the credit products you can get. Simply continuing to polish your credit can make life easier, giving you a better chance of qualifying for the best terms on loans or credit cards.

This article originally appeared on NerdWallet