4 Ways To Build Your Credit Score Today (Without Spending Any Extra Time)


As a commercial real estate and corporate underwriter, I have a very different view of credit scores than most.  A simple score that gives no credence to an individuals income, liquidity or net worth has NO credibility in my opinion.

Regardless of my individual thoughts, the bottom-line is that if you have a low credit score you are going to have a tougher time getting a loan.  Additionally, you will probably pay a premium interest rate if your credit score is too low.

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4 Ways to Build Your Credit Score

  1. Don’t shop around for consumer credit.  The more people that pull your credit, the lower the score  This doesn’t apply for a mortgage or new car loan, but I wouldn’t chance it.  Try and get a preliminary rate quote before you give the lender permission to pull your credit.
  2. Don’t close that line of credit or any credit cards.  A big percentage of the score is revolving balance to revolving limits.  A high ratio points indicates a borrowers stress to pay.
  3. Don’t pay charge-offs.  Charge-offs drop after seven years.  If you pay them you are keeping them open, which is hurting your score
  4. Don’t open new accounts. Over the long-term a lot of revolving accounts helps you.  However, in the short-term opening a bunch of revolving accounts will drop your score significantly.

Above are 4 tactics you can use to improve your credit score without spending any extra time.  However, I want to leave you with a bonus tactic that can improve your credit score by over 100 points in 1 month.

My friend recently got turned down for a mortgage because his credit-score was too-low.  (see above comments on my personal thoughts on credit scores!  My friend makes six-figures, no debt and has $50K ready to put down on a $150K house purchase)

Anyway, my friend has a line of credit for his business but he personally guaranteed it, so it was reporting on his personal credit report.  He quickly paid that off.

The next thing he did which caused a huge spike in his credit score was that he used his credit card like a debit card.  He put everything he could on his credit card and then every three to five days he would make a bank transfer and pay-off the balance.

Thirty-days later, his credit score improved by over 100 points.

One final credit boosting tip for today: A recent study by the U.S. Public Interest Research Group found that 79 percent of credit reports contained some kind of error. Sometimes improving one’s credit is simply a matter of getting rid of the errors!

What’s the craziest credit score story you have or have heard about? Or do you have any tips that you know can help improve someone’s credit? Tell me about it in the comments!

Photo: bitzcelt

About Author

Jimmy Moncrief is a bank underwriter and real estate investor. He blogs at RealEstateFinanceHQ.com where he talks about all things real estate. He also is the creater of free evernote templates for BiggerPockets members to learn how to better organize and automate their real estate investing.


  1. I keep seeing on my credit report “time from last account open too short” and I’m thinking it’s because when I buy a new property, I have to put the gas/electric in my name until the tenant takes over. So then it counts as a “new account” which makes it look like I’m opening new accounts 3-4x per year. Does this really hurt me?

  2. Lender for Walgreens, did not care for my score is income. Was told, they give loan to the credit of tenant, and only that. Can get !00% loan, but negative cash flow. Check CTL loan on Googhle

  3. Hi Kris,

    Lender for a CTL loan is a whole different Universe.
    The lender is basing the loan on not only the credit of the tenant but that they are investment grade BBB- or better.

    The lease is backed by a billion dollar national company that has been in business for about 100 years. They are doing 95% loans now as they have backed off of pharmacies a little bit.

    • Hi Bobby,

      It depends on which credit bureau the underwriter’s lender uses. Here is the formula for each of the scoring models:

      The FICO score bases its credit-scoring formula on five categories of information, while the VantageScore uses six.

      FICO Score •35% payment history
      •30% level of debt
      •15% age of credit history
      •10% types of credit
      •10% credit inquiries

      VantageScore •32% payment history
      •23% utilization
      •15% balances
      •13% depth of credit
      •10% recent credit
      •7% available credit

      Both the FICO and VantageScore credit scoring formulas give about the same amount of percentages for payment history and new credit inquiries. But, there’s a big difference in the treatment of utilization, age of credit history, and types of credit.*

      *Information from About.com so I am not committing plagiarism

  4. Not paying accounts that have been charged off only works if the account holder does not sell your account. If it is sold the new owner can and many times will report it to the credit bureaus and it will appear as a new account starting the 7 year count down all over again. I find it best to pay your debts and if it is charged off you can settle for pennies on the dollar.

  5. Great post, Jimmy –

    Question (anyone can provide input) – I’ve heard of the 14 day window for accumulating bank rate quotes/pre-quals/etc such that your credit doesn’t take a hit. How do credit reporting agencies really view this? i.e. Let’s say I had my credit pulled last month for a conventional loan but have not executed one, and now I’m shopping for a portfolio loan to do a quick flip. Would the reporting agency say “they checked his credit last month so he’s high risk”…?

  6. Regarding #3: Don’t pay charge-offs. Charge-offs drop after seven years. If you pay them you are keeping them open, which is hurting your score…

    I recently met with a mortgage broker and he suggested the opposite, sort of. He suggested offering to settle the debt with the creditor for a lower amount but only of they will give you a letter stating that the debt has been SETTLED IN FULL and that they remove the debt from the credit bureaus.

    Say you have a charge-off that’s three years old, four more years is a long time to wait for it to dissappear from your credit report.

    All that being said, I have no first-hand experience with this method but I have no reson to doubt it. If anyone has any feedback, I’d love to hear it.

  7. Really great informative article! I am what I refer to myself as, a “credit report junkie”, meaning I read every article I can, research credit data, etc. and basically spend way too much time researching credit. I have been monitoring my own credit reports (with all 3 major credit bureaus) ever since they first “allowed” us to request our own credit reports and scores years ago so I hope you don’t mind if I add some additional “tips”.

    You can shop around for the same type of credit within a window of a couple of weeks, without it “dinging” your credit score. Some will say you can go longer shopping and having your credit pulled for the same purpose, but I personally wouldn’t go longer than two weeks. This is called a “hard inquiry” or “hard pull” in credit terminology (“soft inquiry” or “soft pull” explained later). Say for instance a auto loan – if the inquiries from several lenders/auto loan companies is specifically under the classification of “auto loan” inquiry, your score shouldn’t be affected. Just be sure you check to see what category the lender uses, so the type of inquiry doesn’t vary from one lender to another and again, stay within a two week window. If one lender uses an “auto loan” inquiry and the 2nd one uses a different classification for their inquiry, they could potentially affect your score negatively. There is more to this, but I don’t want to over-extend my own posting.

    Each of the types of credit you have, namely installment loans, credit cards and mortgages, each carry a percentage value of your total score. You want to have a blended mix of any of these types of credit and most definitely not too much in credit card debt! Try to keep your average monthly credit card debt under approximately 10% of your credit limit and that will help your credit score significantly. Installment and credit card debt is the 2nd highest percentage value of your credit score which is about 30% using the FICO scoring method. VantageScore uses a bit more complex methodology of these two types of debt. The highest percentage value of your score is whether you make your payments on time or not which is 35% using the FICO method.

    You touched on both closing lines of credit and opening new accounts. People definitely need to have an awareness of how this affects their score. The older your accounts are, the higher your score will become, year after year. Opening new accounts will reduce your score because the two scoring models, FICO and VantageScore, average out your length of credit and opening new accounts will significantly drag down your average history. Don’t be drawn into signing up for a store card just because they are going to give you a discount for doing so. That is the only one-time perk you get from opening an account with the store just because you wanted that one-time insignificant discount. It isn’t worth it. Hard pull inquiries carry about a 10% weight factor (again, this is using FICO’s formula) on your credit score and will remain on your credit report for two years..

    In response to a couple of the inquiries you received (I’m not trying to step on your toes! I just love the topic of credit!), opening any type of utility account may be either a hard or soft pull. The best advice I have is to try to ask them what category (ie. “utility inquiry”) they use to pull your credit report and which credit bureau they use. Then call the credit bureau and ask them if that particular type of category will be a hard or soft pull or take a shot at seeing if you can open the utility account without having to give your social security number. Also, people should be aware that more and more utility companies (including cell phone carriers) are now reporting your on-time or late payments to the credit bureaus. Shopping for insurance generally falls under soft pulls, so they shouldn’t affect your credit score.

    I hope this information is additionally useful to some of your readers in addition to the information you provided them with.

  8. Thanks for the post, Jimmy! Good info here. It comes at a great time for me because I am trying to get my score up some, even though It’s already pretty good. About #4, If you open new credit cards every 6-8 months is that considered short term and does it negatively impact your FICO? Furthermore, how is your average age of credit effected by opening cards exactly? Thanks!

    • Chris, you may already know how to do the math, but for discussion sake or anyone that is interested, I gave an example below. The weighted average carries 15% of a FICO score. The VantageScore that was developed by Equifax, Experian and Transunion is pretty close to this at 13%, but Equifax tends to stick with using the FICO model and the other two major credit bureaus use the VantageScore. Credit bureaus generally like to see an average of about 7 years. I’m not the exact number of years, but I’m pretty sure I’m close to what they like to see and to keep your score higher based on my recollection of the last time I looked at my credit report, which is usually about 4 times a year. Jimmy’s right that the information is proprietary, but if you were to pull your own credit report with the score, at least with Equifax, they will give you the analysis for the averages on all 5 categories used in the FICO scoring model of statistical information for consumers in their database. The longer the better so avoid opening new accounts since it will reduce the average length of years of your credit history, or it will be like shooting yourself in the foot, unless you intentionally want a lower score.

      Here’s an example of a person that would have a better than average credit score in the category of the average length of credit history:
      Card #1 15 years – 180 months
      Card #2 12 years – 144 months
      Card #3 5 years – 60 months
      Total: 384 months/3/12 = 10.6 years average length of credit cards

  9. Christopher

    Great questions!

    I don’t have an “exact” answer because the true methodology is proprietary and not revealed.

    I don’t believe your strategy is hurting you though. If you are paying off the credit cards, you credit limits will keep increasing and your available credit will increase which helps your score.

    Hope this helps!

  10. Great article Jimmy. Have just one quick question. You mention liquidity as one of the criteria you look at when you underwrite your loans. Question is does having more than the required (would that be 6 mo PITI) amount of liquidity, or reserves if you are calling them one in the same, help a little or a lot? The residential side seems to give almost no value to the available cash w/o w2 but is it different on the commercial side?

    If the property is what is qualifying for income, it stands to reason large cash reserves is very important when looking at the borrower. Is that right or wrong?

  11. I went for a car loan. The bank checking dropped me 20 points minimum. The dealership cost me another 30 points. I went from able to get a 1.9 APR to only able to get a 4.9 APR, simply because they checked my credit. That’s crap. Them checking did not affect my weekly paycheck, so it sure as hell doesn’t reflect on my ability to pay. Credit calculation is bull.

  12. Very timely article. I am actually in the same exact situation as your friend (same purchase and everything) but I have limited credit history. I was told to immediately open 3 credit cards and get added on as an authorized user to 3 other credit cards in good standing that have been open for a long time. My credit score was 672 before I did all of this. I will check in a couple of months and see if anything changed.

    • Chris, I wanted to respond to your post, hopefully, to give you better guidance than whomever gave you the advice you did get your information from (no insult intended), so you can protect and improve your score although it sounds as if you already opened the 3 new accounts.

      If you haven’t opened all 3 accounts, only open one or two. The reason is, if you don’t have the right “blend” of the number of credit cards along with installment loans and/or a mortgage, you will be “too heavy” in revolving credit (ie. credit cards) and it take longer to increase your score. If you already have already one or two installment loans, three credit cards shouldn’t hurt you.They will review your credit report approximately every 6 months and depending on your score and payment history, increase your credit line when it reaches the “benchmark” they are looking for. Since this is proprietary information for each creditor, they won’t disclose to you what that benchmark is. Whatever you do, avoid department store cards and only get credit cards such as Master Card, VISA, Discover, etc. which carry more worth to creditors who may want to offer you credit in the future.

      If you have already opened the accounts, there’s no going back as you definitely shouldn’t close the cards after you already opened them. Just keep the accounts and over time your credit score will rise.

      A piece of advice on paying your cards off every couple of days. Don’t pay your balances off until after you get your statement. The reason is that you want the credit bureaus to receive the monthly reporting from your “tradeline” (credit terminology), (ie. credit card company), that you charged on the card and paid off the balance on time. If you pay your balance more frequently than that, your tradelines will always be reporting you with a zero balance – you want to show that you charged on the card and paid it off after they report to the credit bureaus. Some companies may only use 1, 2 or all 3 of the major bureaus for reporting, because they pay a fee for utilizing the credit bureau service(s). The key is not having your balance more than 10% of your available credit line when the tradeline reports to the credit bureau.They don’t all report at the same time each month or at the same time as each other, such as the end of the month – some report earlier (1st or 2nd week of the month) but many report sometime between mid-month and the end of the month. It depends on the tradeline. If you do this and pay attention to when they report each month, you see the trend of when each of your tradelines report to the bureaus. Then payoff your balance after the reporting date but before your statement due date, so there is data for the tradeline to report on. The date they report may vary a couple of days, but it will be around the same time each and every month.

      If you want to get really savvy at knowing how this works, take out an annual personal/consumer subscription with one of the credit bureaus. Although it is not cheap to subscribe, which I strongly recommend everyone does, but especially if they already have good credit. It is well worth the money in the event someone gets ahold of their credit information. There are extremely valuable reasons for doing this, but a story for another day, not for the purposes of my response here. So on with my suggestion to you or other readers if interested in doing this is to be sure your subscription includes notifications to you of when each of your tradelines report in each month, as well as getting the other benefits a subscription comes with. Credit bureaus all offer a variety of different types of subscription service, such as with or without your score. Definitely go with the subscription that comes with your score as well as being able to access your report several times a year. I like Equifax.com because I find this is the #1 bureau that most credit card, installment and mortgage companies report to and the selection of subscriptions they have. Some companies report to all 3 or maybe one or two of the bureaus, so if the companies don’t report to all 3, you would find the 2nd most popular they report to is Experian and the 3rd is Transunion. I hope this information is helpful and good luck on increasing your credit score – sounds like you are on the right path and you started with an already good score!

  13. Chris Rosenberg on

    Thanks Nancy. That was helpful. I already opened up a capital one MasterCard and a Walmart card. I’ve had a secured Visa card for about 12 months now. And I didn’t realize I had to keep a balance on the card until my statement date and then I should pay it. Definitely informative.

    • Hi Chris – since you have had the secured VISA for 12 months, you may want to give that credit card company a call to see if they are willing to increase your limit at this time and if they say they can’t, ask them when the next time will be that they may be reviewing you for a credit line increase – it won’t hurt to ask. If you have already had the card for 12 months, it shouldn’t require you putting another deposit down from this point on, to get increases in your credit line with them. I don’t suggest giving them any more money to get an increase, especially since you now have some new unsecured cards. They may use the information from the last soft pull they did to make a decision, depending on how recently ago, they last reviewed your credit. Generally, if they pull a new report, it will be a soft pull, because you aren’t looking for “new” credit with them, so they already have the right to do a soft pull on you which they have probably been doing this for the last 12 months, either every or every other month. Don’s share with them on the phone that you opened more accounts and be sure not to close that card, since it has already given you 12 months of credit history which helps your average age of credit history. You can also ask for an increase on-line instead of calling them.

  14. Your point to how stupid basing a decision on a number with little context is can be seen in these tips.
    Getting the right “mix” of credit and clustering inquires and the avg age of accounts gives zero information about your capacity to repay. Really that asinine stuff doesn’t even give information about your history of paying.
    It is baffling that often moving things around in clearly financially detrimental ways will help your score.

    Something else that is ridiculous in my opinion is protecting your score for the sake of having a good score.
    If you don’t open accounts or use the credit you have who cares what your score is?

    For what it’s worth my score bounces between the mid and high 700s most of the time. I’ll open accounts when I want to and think nothing of taking 5 figure credit card advances for 95%+ of the available line when I get a 0% promo.
    Use it to invest, make some money, pay off before regular rates kick in, rinse and repeat.
    No point in having good credit if you don’t monitize it.

  15. Thanks for the article Jimmy. This is all relevant to us as we moved to the US last year and have been steadily building our credit score (I think having no record is worse than having a low score). We built up our score by a combination of part-financing on cars, autopay where possible (so bills always paid on time) and a secure credit card with our bank where we paid most of the balance each month (except for small amount). Our score is now over 700 and we have an Amex card with a $10k limit. However, we went to refinance our cars to a better rate but the bank told us that we didn’t have our high credit score for long enough. Is this a factor that you’ve come across?

  16. Most company credit cards don’t show up on your personal credit report. There is very few that do because most people don’t want it. However the card my employer uses, does. This was great for me as I was just starting to building my score. Built credit on my employer’s dime!

  17. Great article very informative. Where can I obtain my own credit report without hurting my score? I want to review for errors and try to improve after a foreclosure I had 3 years ago.
    Thank you!

  18. Christopher Leon on

    @ana – Annual Credit Report.com The only source for your free credit reports. Authorized by Federal law

    FYI, anytime you pull your own credit report – it does not effect your score. Only when you let someone else do a “hard pull.” I understand it to be an actual request for credit review, where as a “soft pull” is something they can do by reviewing your history without physically pulling a report. I do soft pulls all the time with my credit cards to increase the limits and it does not effect my credit score adversely. Actually, I would think it helps me because I am increasing my credit line, which brings my ratios down.

    Good luck

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