Image source: Getty Images
Your credit score isn't just a random number. There are various financial factors that go into calculating it, and all told, it paints a picture of you as a potential borrower.
A higher credit score indicates you're a reliable borrower who's likely to keep up with your obligations. A lower score indicates you may have had trouble making payments in the past, and you're a higher risk.
Whether you're looking to apply for a mortgage, personal loan, or credit card this year, the higher your score is, the more likely you'll be to get approved. And in the case of a loan, a higher score could be your ticket to a lower interest rate, which can make for more affordable monthly payments.
If you feel your credit score could use some work, you're in pretty good company. A recent CIT Bank survey reveals 48% of Americans have the goal of improving their credit scores this year. Here are some steps you can take to raise that number and open the door to more borrowing choices.
1. Pay all bills on time
Your payment history carries more weight than any other factor when determining your credit score. Being timely with your bill payments could help your score improve.
To help ensure you end up paying on time, set calendar reminders for when your various bills are due so you're not late out of sheer forgetfulness. An even better bet is to set up your bills to get paid automatically when that's possible.
If you're worried you'll be late with bills due to a lack of cash, put yourself on a budget and adjust your bills accordingly. You may need to cut back on spending in certain areas, like leisure, to ensure you're able to keep up with your non-negotiable bills.
2. Chip away at your credit card debt
Even if you're able to make your minimum monthly credit card payments on time every month, too high a balance could end up dragging your credit score downward. That's why it's a good idea to work toward paying off your existing balances.
One tactic that might help is to do a balance transfer, where you move your existing balances over to a single card that may come with a 0% introductory APR. That said, you generally need a pretty good credit score to qualify for a balance transfer, so this may not be an option.
Even if you can't do a balance transfer, boosting your income with a side hustle could leave you with extra cash at the end of each month -- cash you can use to chip away at what you owe.
3. Check your credit report for errors
The credit bureaus that put together your credit report sometimes get incorrect information that can land on your record and cause your credit score to drop. That's why it's so important to check your credit report a few times a year and make sure it's accurate.
Meanwhile, if your goal is to close out 2022 with a higher credit score, get a copy of your credit report now and check it for mistakes. If, for example, you see a delinquent debt listed in your name you don't recognize, that's something you'll want to look into. It may be that someone with a similar name or Social Security number to yours incurred that debt but it landed on your credit report accidentally. Removing it could be your ticket to boosting your credit score quickly.
There's much to be gained from raising your credit score. If you feel that yours needs work, take these steps to increase your chances of seeing that number rise by the time 2022 comes to an end.
Alert: highest cash back card we've seen now has 0% intro APR until 2023
If you're using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2023, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
