I recently got a few mortgage quotes and was told that I didn't qualify for the best mortgage rates because my credit score is too low. It's 620 and needs to be at least 680. Is there anything I can do to add a fast 60 points to my credit score?
Elizabeth L., Salt Lake City
Yes, Elizabeth, there are ways to increase your credit score, and some of them don't take much time. Here's a quick list:
- Pay down your account balances to less than 50% of your available credit (less than 30% is even better). This lowers your credit utilization ratio, which is 30% of your score.
- Ask for increases to your credit lines but don't use them. This also drops your utilization.
- Have a family member with excellent credit add you as an authorized user to his or her accounts. You then get credit for their credit history on those accounts. Do not actually use these credit accounts.
- Go through your credit report and see what it lists as causes for your low score. If it's "too many accounts with balances," for example, you know what you need to do to increase it. However, if you must close accounts, don't eliminate your oldest ones--the longer history helps your score.
- Highlight any inaccuracies that could be considered derogatory, like collection accounts, balances shown as higher than they are or credit limits showing up lower than they are, or late payments. Have your lender order a Rapid Rescore (a service only they have access to), which will instantly make the needed changes and hopefully raise your score.
- Pay everything on time, of course. Give it three to six months and check your score again.
These changes are certainly capable of adding 60 points to your score, and those extra 60 points can save you thousands in loan fees. Want to test drive changes? Try the FICO Estimator at MyFICO.com and see how changing your accounts can affect your score. For example, if your FICO is between 600 and 650, you had one 30-day late payment three months ago, and you are using 70% of your limits, by paying them down to under 50% and having no late payments in the last six months, the score increases 60 points, making you eligible for the lowest mortgage rates.