The Credit Mistake You Can Fix in 30 Days

Trying to find a quick fix for bad credit isn’t easy, because for the most part, the things that go into a good credit score take a while to develop. In the most common credit scoring models, payment history has the most impact on your score, and that takes at least six months to establish. Recovering from a late payment requires even more patience. Once there’s a late payment in your credit report, all you can really do is give it time to reduce its weight on your credit score — there’s nothing you can do going forward that will make it “go away.”

But the next most important aspect of credit scoring works a bit differently. It’s called credit utilization, and that’s a measurement of your credit card balances relative to your overall credit limit. Using less than 30% of your available credit can help your credit score, and the lower your utilization rate, the higher your score will likely be. Perhaps one of the most important things to know about credit utilization is how quickly you can change it, consequently changing your credit score.

That can be a bad thing, because running up big credit card balance can quickly tank your score. At the same time, if you can quickly pay down high credit card balances, you could see serious score improvement in a short period of time.

Keep in mind you probably won’t know exactly when your credit card issuers will report your balances to the three major credit reporting agencies, so you may not see the credit scoring effect of paying off high balances right away. Issuers tend to report account activity on a monthly basis, so you’d likely see a change within a month of reducing your credit utilization.

You may want to quickly improve your credit scores for many reasons, like wanting to buy a car, take out a home loan or any number of life situations in which credit scores are a factor. If you don’t have the means to significantly reduce your credit card debt, you could consider consolidating it with a personal loan (though you’d have to weigh that against the potential negative consequences of taking out a new loan). However you want to approach improving your score, you’ll need to see how your plan is working. You can keep tabs on that by getting two free credit scores every 30 days on Credit.com.