Paper copy of a credit report.

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While reaching the upper echelon of credit score "elites" takes time, cardholders can take simple steps to improve their credit scores quickly. In the previously recorded video segment below, The Motley Fool analysts Nathan Hamilton and Michael Douglass talk about one of the biggest levers people can pull to improve their scores.

Douglass: OK, first question comes from Bart. This is very appropriate, what's the fastest way to improve my credit score? We were just talking about improving it. Generally speaking, when we're approaching an issue of any kind, we want to approach it by taking the biggest lever and pulling that first. The two biggest parts of your credit score are whether you pay on time and what percentage of your total debt you're using on a monthly basis. Let's start with paying on time.

Hamilton: That's one that you can move your FICO score the most. It does take some time to do it, because FICO, Fair Isaac Corporation, wants to see a history of paying on time. The one that you can absolutely use to your advantage to improve your score faster, if you're looking at taking a mortgage on in the next few months and you want to improve your credit scores, bring your credit card utilization down. That assumes you're already carrying some credit card debt. When I say credit card utilization, just looking at it, it's your current debt divided by your available credit limits, across revolving debts, which are credit cards, for the most part.

Douglass: Let's say, for example, you have a credit card with a limit of $10,000 monthly. And you spend $3,000 a month on your credit card, therefore you have a 30% utilization.

Hamilton: Yeah. And spending, it's also important to put the disclosure on that that, spending and carrying that balance past the statement date. Because what happens on the statement date is your credit card issuer reports that balance to the credit scoring bureaus and so forth. But, if you pay off your balance before the statement date, a zero balance is reported, your credit utilization is 0%. If you are going past that statement date and carrying the balance, then in that scenario, I believe it was $3,000 on $10,000, 30% would be your utilization ratio. Now, why that can impact your score fast is, when you bring the utilization ratio down, that is reported that month to the bureaus, and your credit score is going to reflect that. So, there are actions you can take in the very short-term to pay down debt to improve your score.

Douglass: Absolutely. Really, with both of those things, it comes down to really good credit hygiene. Paying off your debts on time, and then also leaving yourself a big buffer of debt that you can take on that you're not choosing to because you don't need it. That says really powerful things to the various credit bureaus.

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