How to Raise Your Credit Score

Credit score gives an indication how credit worthy you are and the score ranges from 300 to 850. If you have a low credit score, banks assume that you would make late payments or would default in making payments on the specified date. If you have had a few problems of paying bills late, then you need to start paying on time. That's the sure shot way of raising your credit score. It's not that you are alone who have a bad or very bad credit rating, there are millions of people, and most of them qualify for a loan or credit card. Yes, the rates of interest would be higher, but it's a great opportunity to improve your ratings and get a better deal later on, when you may want to buy a home.

How Long Does it Take to Raise Your Credit Score
The answer to this question depends on a lot of factors. The first thing that you need to do is check your score from all the three credit bureaus and check for discrepancies. If there is any dispute and your credit history is reported wrong, then it would take some hard work from you and it would take some time. The credit agencies update their records every three to four months, so it's only after that, that your scores would be reflected positively. You need to pay all your bills, be it credit cards, utilities, etc. on time, so that it reflects positively on your report. At times, you may have to wait for six months or even more so as to raise your credit score.

Tips to Raise Your Credit Score
Once you have got details of your credit report, and if you agree with it, you need to start taking steps to improve your ratings. The best way to raise your credit rating is to pay off your installment loan like student, auto, mortgage, etc. Moreover, when you think of raising your credit score, you should try to pay off your credit card debts, as it reflects positively on your credit ranking and is one of the best tips to improve your credit score. Lending institutions want to see a big difference between the credit amount you have been using and the credit limits which you have. So if you have pending credit card debts, it's a good idea to reduce the amount to 30% of your available credit limit on every card you owe. Most people may tell you to pay for the card which has a higher rate of interest, but you can also choose to pay off the card which are close to their limits. If you have a number of credit cards, you can also think of credit card debt consolidation, so that you have to pay just one loan.

If the amount you borrow each month starts accumulating, it can affect your scores, even if you pay off the whole amount at one go by the due date. The balances of your last statement are reported to the bureaus and even if you pay off every month, that does not help in improving matters. But if you limit the amount you borrow each month to less than 30% of the limit, you are doing a great service to yourself. It's necessary that you check the limits, as several lenders artificially depress your score, in case you have exceeded a certain limit. If you ask them, most lenders will update this information.

If your credit history becomes old, that's better. But for that you will have to continuously make on time payments for some time and once the amount is paid off you can stop using your old card. Once you do that, the accounts may no longer be updated in the credit bureaus. Though these accounts will show as active, but they don't hold much importance, compared to those accounts which you have been using.

How Fast can You Raise Your Credit Score
There are several ways by which you can improve your score, but it takes some time for the credit bureaus to get that reflected in their reports. Usually, it takes between three to six months of continuous payments and it's only after that, you will come into the good books of the credit bureaus. Many a time, even if you have made your payments on time, the credit agencies may not update your information, so in such a case, you need to get in touch with them and get things cleared. You should try to get a copy of your credit report from all three credit bureaus and study them carefully. In case there is any dispute, bring it to the notice of the bureaus immediately, so that things can be corrected immediately.

So, there are several answers to the question, how to raise your credit score. The most important thing that you need to remember is to make on-time payments regularly, and other things will take care of itself.