How to Raise Your Credit Score By 200 Points

You can raise your credit score by 200 points by making on time payments, avoiding new lines of credit, reducing your credit utilization, monitoring your credit report, keeping existing accounts open and active, using various credit types, and using a budgeting app to make tracking your score simple and motivate you to stay consistent.

Bad credit can lead to a host of challenges, namely high interest rates or struggles to get a loan. Once you’re stuck with bad credit, it can feel like a vicious cycle to work your way out of. Learn how to raise your credit score 200 points to end the cycle and improve your finances overall.

Can You Raise Your Credit Score by 200 Points?

Yes, you can raise your credit score by 200 points by following a credit-rebuilding plan. This plan involves improving several aspects of your financial health and monitoring your credit score. The credit bureaus offer insights into the largest factors impacting your credit score. You should review those regularly to learn what you’re doing well and where you still have room for improvement.

The process is not immediate and requires ongoing work. But with time, you’ll see improvements and reach your 200-point improvement goal.

8 Ways to Raise Your Credit Score by 200 Points

Learn how to raise your credit score. These strategies will help you improve the way you use credit to improve your creditworthiness.

1. Make On-time Payments

Payment history makes up 35% of your credit score calculation. It is the most essential element in improving your credits score. No lender will want to give you money if you have a history of late or missing payments.

Making on-time payments will demonstrate that you are a reliable borrower. While this can be challenging if you’re in a financial bind, it is the most impactful element in raising your credit. 

While making on-time payments for non-debt expenses like your utility bills won’t directly impact your credit, going too long without making payments on these accounts will. That’s because the utility company will eventually send your account to collections. At that point, you’ll see negative credit score effects.

2. Avoid Applying for New Loans or Lines of Credit

While working to improve your credit score, you should not apply for new loans or lines of credit. Too many applications in a short timeframe will make lenders worried about why you need so many loans, as it signifies that you are taking on debt quickly. While taking on debt is not always bad, you want to demonstrate that you have adequate funds to repay the loan. 

While rebuilding your credit, your goal is to focus on the financial tools and accounts you already have. Get those in order before applying for new ones to secure the best terms and interest rates.

3. Maintain Credit Utilization Below 30%

Take a look at your credit cards. Review the line of credit available to you on each card. Then see how much revolving credit you’re using on those cards. If it is above 30%, this is having a significant impact on your credit score.

The fastest way to improve this is to request a credit line increase on your credit cards. But depending on your current situation, you might not be approved for an increase. In that case, you should pay down your credit card debt on each card to get it below 30% utilization. This is a high-priority task because credit utilization makes up 30% of your credit score.

Some ways to keep your credit utilization within check include:

• Avoid overspending by monitoring your accounts throughout the month
• Keep old credit cards open because they keep your available credit line higher
• Make strategic credit card payments based on which accounts have overutilization
• Prioritize paying off your credit cards to see credit utilization improvements

4. Monitor Your Credit Report and Dispute Inaccuracies

While the credit bureaus are quite good at pulling data from various sources to build your credit report, the process isn’t perfect. You might find inaccuracies on your credit report. Pull reports regularly and analyze them closely. Raise disputes about anything you don't recognize or that looks a little off in terms of the name being reported or the wrong payment dates. 

This is a healthy practice regardless of whether you’re working to raise your credit score. You might spot fraud and can attend to it quickly to reduce its impact on your credit and finances.

5. Avoid Closing Old Accounts

While you might feel tempted to close old accounts, such as credit cards you don’t use, this practice can negatively affect your credit score. If the credit card charges an annual fee, contact the company to see if you can convert it to a different card type with no annual fee. But if the card does not charge a fee, just monitor the account. If you can, spend a little bit using the card and pay it off each month to keep it active. This will also discipline you to check on the credit card regularly to watch for fraud. You don’t want financial accounts that you never check or use.

6. Use Various Credit Types

If you feel like you’ve been handling your finances correctly but are still dealing with a poor credit score, the reason could be due to not having multiple credit types, which creates a thin credit report and doesn’t show that you are responsible for making payments. 

Apply for a credit card to show you can handle revolving credit. Pay it off each month and keep your credit utilization below 30% (i.e., if your credit limit is $10,000, avoid spending more than $3,000 per month on the card).

Consider applying for a nonrevolving line of credit. These credit types include mortgages, auto, student and personal loans. While these loan types end once you pay them off, they positively affect your credit score.

Consider applying for a credit builder loan if you need diversity in your credit report. These small, low-interest loans can positively impact credit scores for individuals with limited credit history. Just make sure you make on-time payments to reap the benefits these loans can provide.

7. Use a Budgeting App with Built-in Finance Tracking

Building your credit takes time and can feel discouraging at first when you see minimal improvements month-to-month. Using a budgeting app with built-in finance tracking will help you see your improvements over time. Plus, you’ll have a reason to log in and check your credit score monthly as you update your budgets. These comprehensive apps put your finances in one place for easier management and provide a clear picture of the most important aspects of improving your credit.

8. Stay Consistent

One of the most important factors is consistency when working to improve your credit score. While you might finish each month with a perfect record of fulfilling the above-outlined goals, you should say that you were close with most or all of them. 

Credit improvements take time. Don’t get discouraged in the first month if you don’t see improvements. Stay the course and you’ll start seeing improvements soon.

How Fast Can You Raise Your Credit Score to 200 Points?

Significant changes to your credit score take time. But by following the right strategy, you can see improvements within as little as one month. You’ll never see big changes in less than a month because the credit bureaus pull data monthly. 

Significant changes arise after approximately six months. Within 1-3 years, you’ll have a credit rating that helps you qualify for the best loans, lower insurance rates, quality apartments, and more. You just have to stick with your financial plan and consider the largest factors impacting your credit.

Improve Your Borrowing and Buying Power

Your credit score impacts a variety of aspects of your life. Taking time to improve your credit score will impact various areas of your life. In the process, you’ll pay down high-interest debt, such as your credit cards, to improve your finances in various ways. The most important aspect of working to improve your credit score by 200 points is to stay consistent and build healthy financial habits.

Frequently Asked Questions