What’s the fastest way to boost my credit score?

For most people, the fastest way to improve your credit score is to pay down your credit-card balances.

About one-third of your FICO score (the score most lenders use) is based on your credit-utilization ratio, which is the total of your credit-card balances divided by the total of your credit-card limits. It’s how much you’ve charged that counts -- regardless of whether you pay your balance in full each month. A good target is to use 20% or less of your available credit; a lower percentage is even better.

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“One of the common complaints we hear from consumers is they feel their scores are inappropriately low -- in the 600s -- even though they have never been reported late on any credit account,” says Craig Watts, of FICO. “Such people almost always have high balances -- and commensurately high utilization rates -- on several credit cards, and that lowers their scores.”

An example at FICO’s Score Simulator (at www.myfico.com) shows how a hypothetical customer with a FICO score of 707 could raise his score to as high as 777 by reducing his balances on all revolving accounts by 90% to 100% over 24 months. This example takes into account the benefits of keeping accounts open longer, but paying down balances faster could improve your score almost as much. “How fast a lower balance can be reflected in one’s score really depends on the lender,” says Watts. Many lenders send data updates to the credit bureaus once a month. “Depending on where your account payment falls in your lender’s data-reporting cycle, your new balance could show up on your credit report within several days -- or it can take several weeks to appear.”