It’s not just a random number that determines your credit score. Different financial factors play into how it is calculated, and it gives a good picture of who you are as a potential borrower.
You have a higher credit score if you have a history of paying your debt on time. According to FOOL, you’re at a higher risk if you have a lower score and have had problems making payments in the past.
If you plan on applying for a mortgage, personal loan, or credit card this year, the higher your score, the better your chances of being approved. Higher scores can also lead to lower interest rates on a loan, making monthly payments more affordable.
It’s pretty common to feel like your credit could use a little work. A recent CIT Bank survey found that 48% of Americans are aiming to improve their credit scores this year. We’ve put together a list of steps you can take to increase that number and increase your borrowing options.
1. Keep Track of all Bills and Pay Them on Time
When determining your credit score, your payment history is more important than anything else. Making timely payments can help you improve your score.
Set up a calendar reminder to remind you when your various bills are due so you don’t forget. You’re better off setting up automatic payments when you can than not at all.
Make a budget and adjust your bills accordingly if you are worried you won’t have enough cash to pay your bills. As a last option, to keep up with your non-negotiable bills, you may have to cut spending in certain areas, like leisure.
2. Reduce your credit card debt
You might be able to pay off your minimum monthly credit card payments on time every month, but too much debt can hurt your credit score. Thus, you should pay off your existing balances as soon as possible.
Changing your existing balances over to a single credit card that may be offering an introductory APR of 0% might help. Nevertheless, you may not qualify for a balance transfer if you do not have a good credit score.
The extra cash at the end of each month you get from a side hustle could help you pay down your debt, even if you can’t do a balance transfer.
3. Verify That Your Credit Report Is Accurate
When credit bureaus compile your credit report, sometimes inaccurate information can show up on your record, which will lower your credit score. Because of this, you’ll want to review your credit report a few times a year and make sure it’s accurate.
Meanwhile, if you’d like to finish 2022 with a higher credit score, get a copy of credit report right away. A higher credit score will benefit you in many ways. Take these steps if yours needs improving in order to see that number rise by 2022.