Increase Your Credit Score by 100 points in 60 days

With consumer debt at an all time high, stabilizing and increasing your credit score is a popular topic that endless companies and individuals offer their advice on. Summit Mortgage has been reviewing credit reports and scores for over 30 years, so take it from us: not all of that information you hear out there is accurate!

According to Equifax, the average American’s credit score in 2024 was 705. That number falls under what most financial institutions would consider a “good” score, which means lending companies generally feel that these borrowers are responsible and trustworthy enough to approve for a loan but may not offer the best terms available unless the customer has relatively spotless credit with a long history established.

Credit scores range from 300-850, with anything below 579 being considered ‘poor’ while scores about 800 would be considered ‘excellent’.

In October 2024, the average credit score in the United States saw the first decrease since 2013. Most consumers know how to look up their credit rating but aren’t sure what to do with the information or how to start improving it. If this is something you can relate to don’t panic! With a little determination and some helpful knowledge, we’ll help you take steps in the right direction that could increase your credit score by up to 100 points in just sixty days. Ready to get started?

Want to connect with a local loan officer now to discuss your credit? Complete our Quick Start Form and we’ll connect you with a loan officer that matches your specific needs. They’ll provide a free consultation and guide you through every step of the loan application process.

Where can I check my credit score?

Here are a few options for checking your credit score:

1. AnnualCreditReport.com

2. Myfico.com

3. Individual credit reporting agencies like Equifax, Experian, and TransUnion.

*Please note that your credit score may present differently depending on where you are viewing it and for what purpose. The most commonly used credit reporting agencies outlined above have between 16 and 21 scores based on the scoring model they are using. When applying for credit don’t rely on the app on your phone to be the number the lender will see; it is better used as a guide to identify trending or give you a ballpark for where your score is likely to fall.

How is my credit score calculated?

According to the Consumer Financial Protection Bureau (CFPB) your credit score is impacted primarily by these factors:

* Payment history

* Current debt owed

* Length of credit history

* New credit applications

* Amount and type of credit in use

*Credit available to you

*Past negative credit events (collections, charge offs, bankruptcies, foreclosures, etc.)

Why do I need to be concerned about my credit score?

Lenders will use your credit report and score along with other factors to determine your overall risk level as it relates to borrowing money. They will assess your risk level relating to paying back the money they are considering lending to you based on the history they see on your credit report; this means they look at your income (ability) and your credit (willingness) together.

Limited credit history, missed payments on accounts, past negative credit events within the most recent two years, overutilizing credit available (carrying credit card balances that are over 50% of the limit), excessive debt compared to your income and more than 2 credit inquiries in the most recent six months can negatively impact your credit score but may also be viewed as a sign that you are not responsibly handling the debt you already have.

How can I increase my credit score?

Now that you understand the importance of your credit rating, here are a few straightforward ways that may increase your credit score by 100 points in 60 days:

Ensure you are paying your debts on time

If you are having trouble remembering to pay your cards on time, set up autopay to automatically collect the payment out of your checking account. If you aren’t comfortable with autopay, setting up a reminder on your calendar to pay your bill could be a good option for you. Payments made 30 or more days late will continue to report the late for up to seven years, so making timely payments is incredibly important and should be prioritized.

Address late payments head on

Credit lates generally will remain on a credit report for seven years. If you identify a late payment that is inaccurate while reviewing your credit, you can dispute this through the credit bureau that is reporting it; they will work with the creditor to resolve the inaccurate data. Documented proof of on time payment will likely be required. If you determine that the payment was a legitimate late payment then your options are more limited. Contacting creditors directly to discuss late payments or accounts submitted to collections can help you get an idea of how complex it will be to address them. Here are a few options:

*Find out if there are options to get on a payment plan or make a partial payment to bring the account back into good standing.

*If the late payment is an isolated incident in an otherwise on time payment history some companies will extend a one time courtesy to remove the late. If this is the case, you can write what’s referred to as a “goodwill letter” to explain to your creditor why your payment was late. There is no guarantee that your creditor will update your account.

Don’t ignore collection accounts

A mistake that many consumers make is feeling like an account that has gone to collections is a permanent stain on credit. While an account that was sent to collections is likely to stay on the credit report for seven years, there are a few potential ways to adjust the impact it is having on your score:

*Review the account to ensure that it is your account and that you were contacted about the account prior to it going to collections.

*If you identify an error, dispute the account through you the respective credit bureau.

*If the collection account isn’t an error, contact the creditor directly to discuss options available. You may be able to pay the account in full or negotiated a settlement for a payment below what is owed. You should always request that the account is removed from your credit as a result of the account being paid off or settled; this request may or may not be granted, it’s a goodwill gesture for the creditor to do this for you and is not required of them – it doesn’t hurt to ask though!

*If an agreement is made with the creditor relating to payment of the account ensure you get documentation of what they discussed with you, request a receipt or proof of transaction for any payments you make to them, get a committed timeframe from them for updates to the credit reporting agencies, once the timeframe has passed re-check credit to ensure their promised actions have been completed.

Lower your credit utilization

Credit utilization is the percentage of the balance you have on your credit card compared to your credit limit. This factor also plays a key role in your credit score. Balances over 50% of your total credit limit on any card damage your score the most. The general rule of thumb is to shoot for a credit utilization of 30% or less.

There are a few ways you can lower your credit utilization:

1. Pay down the balance on your card

2. Raise the credit limit on your card

3. Pay your card twice a month, instead of just once, making it easier to ensure the balance doesn’t go over 50% at any time

Keep reading to find out how to raise your credit limit.

Avoid opening or  closing your credit cards

Applying for new credit accounts results in a hard credit pull, more than one credit pull in short period will result in a decrease in your credit score. Avoiding opening new accounts unless absolutely necessary is recommended.

Closing a credit card can hurt your score as it changes your overall credit profile. You will have less credit available to you – even unused credit limits count toward this – and you will also potentially cut down the length of your credit history. Both factors are important and weigh heavily on your credit rating. Even if the cards have no rewards benefits or high-interest rates, use them at least once every six months and pay them in full to avoid their status changing to “inactive”. This purchase can be as small as buying lunch but you’ll reap the credit benefit but keeping up the length of time you have held the card!

The Road to a Better Credit Score

These simple tips are designed to help you quickly improve your credit score. By holding onto those old cards, avoiding late payments, and improving your credit utilization ratio, you’ll be well on your way to having a credit score that makes you feel proud and gives lenders the confidence to approve your loan.