A higher credit score could be yours if you make the right choices.
- A higher credit score might make it easier for you to borrow affordable money when you need it.
- A recent survey found that nearly half of Americans aim to increase their credit rating in the New Year.
Your credit score is the kind of thing you might not pay much attention to until you are ready to apply for a credit card or a loan. At this point, having a good credit score versus a lower credit score could mean the difference between, for example, getting a mortgage at an affordable rate or being denied the opportunity to buy a home.
In a recent survey by Marcus from Goldman Sachs, 44% of respondents said they plan to focus on improving their credit in 2022. If you want to see your credit score improve, here are some important steps you can take.
1. Pay all your bills on time
Your payment history carries more weight than any other factor used to calculate your credit score. If you strive to pay your bills on time, that alone could do wonders for your score. In fact, a good bet is to automate as many payments as possible so that you are not late by sheer forgetfulness.
2. Pay off some of the credit card debt
It is not uncommon to have a small credit card balance here and there. But using too much of your available revolving credit could damage your credit score by increasing your utilization rate. If your credit card balance is high compared to your total spending limit on your various credit cards, paying off some of it could improve your score. Ideally, you don’t want to use more than 30% of your total available credit.
If you are unable to pay off some credit card debt, try asking for an increase in the credit limit on your existing cards. If your accounts are in good standing, your credit card issuers may agree.
3. Correct any mistakes on your credit report
Credit report errors are not uncommon. And if you have incorrect information on your credit report that reflects you badly, your score could suffer.
At the start of the year, order a copy of your credit report from each of the three reporting bureaus – Experian, Equifax, and TransUnion. Since credit reports are free every week until April 2022, it’s not a problem to grab a copy of all three at a time.
Then carefully review these reports and be on the lookout for errors. If you spot one that could be affecting your credit, contact the office with the wrong report and find out what you need to do to fix the problem.
4. Keep old credit cards open, even if you are not using them
You might be considering canceling a credit card in the New Year because you rarely use it. Better bet? Hang in there if you’ve had this account for a while. Having a longer credit history could help your credit score improve, so as long as you don’t pay an annual fee for a card you don’t use, you might as well keep it.
A higher credit rating could open the door to many affordable borrowing opportunities. Use these tips to increase your credit and enjoy the feeling of potentially reaching a big financial goal on your list.
The best credit card cancels interest until 2023
If you have credit card debt, transfer it to this top balance transfer card guarantees you an introductory APR of 0% until 2023! Plus, you won’t pay any annual fees. These are just a few of the reasons our experts rank this card among the best to help you get your debt under control. Read the full review of The Ascent for free and apply in just 2 minutes.