A credit-builder loan will raise your credit score up to 60 points in the first few months, according to Self and MoneyLion, two notable credit-builder loan providers. Research from the Consumer Financial Protection Bureau also found that a credit-builder loan raises your score the most if you don’t have existing debt.
You can use WalletHub’s free credit score simulator to estimate how your credit score in particular will change. The exact increase in points varies depending on factors like where your score is to begin with, the length of the loan and if you pay on time. New credit users may have a credit score of 630 to 650 by the end of the loan period, though.
There are several ways to raise your credit score in 30 days. Reducing your credit utilization is one of the fastest ways to raise your credit score, and you can do it by paying down debt, spending less, paying your bill more often or asking for a higher spending limit. Disputing negative information on your credit report can help quickly, too. The bottom line is that your credit score can change anytime new information is added to your credit report or old information is removed from it. Creditors typically report updated information about loans and lines of credit at least once a month, so making the right moves for 30 days can definitely produce results for your credit score.… read full answer
But you must understand that true credit building is a multi-year process. You’ll still need to manage your money responsibly moving forward for your credit-score gains to last. And that’s one reason why you should never, ever pay for credit repair. Nonprofit credit counselors can be very helpful, but services that make wild promises and charge fees, especially up front, are best avoided.
Now, with that being said, let’s get back to the business of boosting your credit score by next month. Below, you will find a collection of tips that should help anyone improve their credit score quickly. You can also get personalized advice for how to proceed by checking out your free credit analysis on WalletHub.
7 Ways to Raise Your Credit Score in 30 Days:
Dispute Credit-Report Mistakes. Removing negative information from your credit report is perhaps the best way to generate substantial short-term credit-score improvement. But you can remove such information only if it’s wrong or the result of fraud. So go over your report with a fine-tooth comb, cross-referencing each item with your own financial records. If you find something fishy, investigate it further and, if necessary, file a dispute with the credit bureau.
Make a Big Debt Payment. How much you owe, especially compared to your income, has a big impact on your credit score because it tells lenders how risky it would be to let you borrow more. A credit score measures your risk to lenders, after all. So the more debt you pay off, the more your score should improve.
Reduce Your Credit Card Statement Balance. Credit utilization is calculated by dividing your credit cards’ balances at the end of each billing period by their spending limits. So if you reduce the balance listed on your monthly statement, you also reduce your utilization, which in turn improves your credit score. You can reduce your statement balances by spending less, making larger payments, or paying your bill more frequently. For example, paying a credit card’s bill twice per month – once before your statement is generated and again before the due date – allows you to lower your credit utilization and avoid interest.
Become an Authorized User. If a family member has excellent credit, ask him or her to add you as an authorized user on an existing credit card (preferably an old one with a high credit limit and no negative records). This might take too long to process to benefit you in a month’s time. But it should provide a bump pretty quickly.
Dispute Negative Authorized-User Records. Not many people know this, but if you are or were an authorized user on an account that is dragging down your credit score, you can ask the credit bureau to remove it from your credit report. Authorized users are not responsible for paying the bill, which means they don’t have to suffer the consequences of not doing so. You just have to file a dispute.
Ask for a Higher Credit Limit. More available credit will reduce your overall credit utilization ratio, a key component of your credit score. Be careful, though. Many credit-card issuers will re-check your credit history — causing a hard inquiry and short-term credit-score damage — before approving a higher limit. So make sure to ask about your creditor’s policies first. You should also make sure all your credit limits are expressed accurately on your credit reports. If a listed limit is lower than it should be, ask the issuer to report an updated figure to the credit bureaus. Take note, however, that if you have an “NPSL” credit card, there might not be much you can do about an unusually reported credit limit.
Write a Goodwill Letter. If your credit report bears only a minor blemish — one late payment, perhaps — and the rest of your credit history is solid, you can try asking the issuer for a favor. For example, you could call and make a case for why your slip-up should be forgiven and stricken from the record, so to speak. Or you could send an official “Goodwill Adjustment Letter,” which formalizes the request. This tactic is most successful before a negative record actually makes its way to your credit report. But it’s worth a shot afterward as well.
You can keep track of your credit score’s latest developments by signing up for a free WalletHub account. WalletHub is the first and only website to offer free credit scores and full credit reports that are updated on a daily basis. Additional information about increasing your credit score can be found in our comprehensive Credit Improvement Guide.
Personal loans affect your credit score in the short-term and in the long-term. In the short-term, a personal loan may damage your score because it causes a hard credit inquiry and increases your debt load. But in the long-term, a personal loan can either help or hurt your credit, depending largely on whether or not you pay the bills on time. Ultimately, it’s up to you how much impact the personal loan will have.… read full answer
How a Personal Loan Affects Your Credit Score:
Does temporary damage with an initial hard inquiry. When you first apply for a personal loan, your credit score will immediately take a small hit. That’s because applying for a personal loan triggers a hard inquiry into your credit history. But this shouldn’t drop your score by more than 5 points or so, and you should be able to bounce back quickly.
Adds to your overall debt. If you’re approved for a personal loan, you will immediately have a higher debt load, which may cause your credit score to drop in the short-term. That’s because the more debt you have, the riskier it is for banks and credit unions to lend to you.
Reports to the major credit bureaus monthly. The banks, credit unions and online lenders that issue personal loans report payment information to the major credit bureaus on a monthly basis. If you make on-time payments, you can expect your score to increase. But if you are late or don’t pay altogether, your score will drop.
Improves your credit mix. Proving yourself capable of managing multiple types of loans and lines of credit responsibly is good for your credit score. It shows you can be trusted to repay what you borrow in a variety of situations. So if you only have one or two other types of accounts on your credit report, such as credit cards or student loans, your score may benefit in the long run from getting the personal loan.
Could help reduce credit utilization. Personal loans give you a lump sum up front, which you pay back in monthly installments. This is different from a credit card, where you can borrow up to a certain amount any time you want. Credit cards are known as “revolving credit,” and a big part of your credit score is how much of your revolving credit you use up each month, or your “credit utilization ratio.” Personal loans don’t count toward this ratio, so if you use them to pay off revolving debt, you can lower your ratio and improve your score.
In conclusion, as long as you’re sure to pay on time each month, a personal loan should eventually increase your score by a lot more than the initial inquiry caused it to fall. You can also avoid wasting hard inquiries by getting pre-qualified for a loan first. Pre-qualification only uses a harmless soft inquiry. And while it doesn’t guarantee approval, it will let you know if your odds are good.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.