3 Credit Hacks Before Filling Out A Loan Application | Credit Repair Expert

These credit score tricks can help you boost your score to get the money you need at a rate you can afford

Most people only think about their credit score when they need a loan. Your credit score and what’s on your credit report are big factors in whether you get approved for a loan and the interest rate you pay.

Unfortunately, most of the things you can do to improve your credit score can take months or longer to start showing through in a higher FICO score.

The Fair Isaac Corporation (FICO) estimates that it can take up to three years to recover your credit score after just one 30-day late payment on a mortgage and up to ten years after filing bankruptcy.

Estimated Time for FICO Score to Fully Recover

Most likely, you can’t wait that long to get the money you need at a rate you can afford.

Fortunately, there are some credit score hacks that can help boost your score quickly and potentially get you a better rate on your next loan.


Understand why you have bad credit

First off, it helps to understand what affects your credit score and why it can take so long to improve it.

Your credit score is based largely on the information in your credit report, a history of your payments and debts for as long as you’ve had credit. Your payment history accounts for more than a third (35%) of your credit score. That means a history of late payments and defaults isn’t going away anytime soon and will keep your score low until you balance it with lots of on-time payments.

The total amount you owe and how much credit you have available is another big factor, as much as 30% of your credit score. This is one of the few factors you can affect.

Your score is also affected by length of credit history, new credit and credit report inquiries and even the types of credit you use.

Understanding these credit score factors means you can game the system to increase your FICO, in the short-run and for long-term improvement.


1) Dispute errors and negotiate credit marks off your report

You have the right to a copy of your credit report once a year from each of the three reporting bureaus. Check each report for errors and anything that might be hurting your credit score.

You can dispute any errors with the credit bureaus by writing a letter. The law requires that the bureaus investigate any negative errors and will remove them if the creditor does not respond within 30 days.

P.O. Box 7404256
Atlanta, GA 30374-0256

Dispute Department
P.O. Box 9701
Allen, TX 75013

Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000

Just getting an error removed from your credit report can mean a big jump in your score in a few months’ time.

If you have any loans or credit in collection, you can negotiate with the company to pay the debt if they agree to remove the bad marks off your report. Creditors don’t have to negotiate but they’re usually much more interested in getting their money than with what is on your credit report.


2) Get your credit limit raised

This is a sneaky little credit hack but you have to be careful because it can also get you in trouble.

Your credit utilization ratio is the amount of debt you owe versus how much total credit your creditors have extended. If you owe $5,000 on a credit card with a $10,000 limit then your utilization is 50% ($5,000/$10,000).

That ratio is an important part of your credit score because it tells creditors how much you have available. Someone maxed out on their credit might be struggling to find new money and lenders will hesitate to extend more credit.

Asking creditors for a limit increase is a quick way to make yourself look more creditworthy.

Imagine that same $5,000 owed but now on a $15,000 limit, now a 30% credit utilization ratio. The same amount is owed but it looks like the person is spending well within their means.

This credit hack can help increase your score but don’t take it as a license to spend. Just because you have more credit available doesn’t mean you need to spend more.


3) Pay down revolving debt

Up to 10% of your credit score is determined by the types of credit you use.

  • Non-revolving credit includes loans like mortgages, auto loans and personal loans. Debt with a fixed payoff date and usually fixed payments.
  • Revolving credit includes credit card debt and other loans with payments that vary depending on how much you owe on debt that you can continue to borrow against.

While a lot of non-revolving credit will certainly hurt your score, revolving debt is even worse. Your credit score is a measure of how certain you are to pay off debt so a lot of revolving debt, with its varying payments and balance that can get out of hand quick, means more uncertainty in your finances.

Paying down your revolving debt, even if it means taking out a non-revolving personal loan, can help improve the types of credit you use and boost your credit score.

Even these three credit hacks won’t change your score overnight but they might be able to boost it enough over a few months to save you a few percent on a new loan. It might not seem like much but a rate 1% lower can easily save you hundreds in loan payments. Follow these credit score tricks and plan ahead a few months before your next loan for the money you need at rates you can afford.

Joseph Hogue

Joseph Hogue

Joseph Hogue is a financial blogger and investment analyst at PeerLoansOnline, a personal finance website focused on debt management and goals. A veteran and former economist, Joseph lives in Colombia with his wife and son.
Joseph Hogue

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