4 easy ways to boost your credit score by the end of the year

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If you’re looking for a financial goal for the rest of the year, increasing your credit score might be a great choice. It’s something you could do in just a few months, so you still have time to do it. And there are plenty of potential benefits, like qualifying for the best credit cards and being able to pass any sort of credit check you come across.

Credit scores can seem complicated, but improving yours isn’t too difficult. By following a few easy credit hacks, you could make a lot of progress by 2023.

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1. Save on your credit card balances

One of the best ways to quickly boost your credit score is to pay off any balance you are carrying. This helps with your amounts owed, also called your credit utilization rate, which is an important factor in your credit score.

Here’s how it works: Every month, the credit bureaus divide your card balance by your credit limits. For example, if you have $5,000 in balances and $10,000 in credit limits, your usage would be 50%. The lower this number, the better, as it shows that you are not abusing your credit. If it’s too high, like 30% or more, it can lower your credit rating.

If you’re using a lot of your credit, try making a big effort to pay more with your credit cards. Going from, say, 60% credit utilization to 25% can have a big positive impact.

2. Ask your card issuers for an increase in your credit limit

There’s also another way to improve your credit utilization, and it doesn’t take a lot of work on your part. Ask for a credit limit increase for all the credit cards you have. Each time you get a higher line of credit, it lowers your credit usage, assuming you keep the same balance.

Let’s say again that you have $5,000 in balances and $10,000 in credit limits, for 50% credit usage. You then request increases, and at least some of them are approved, taking you up to $15,000 in credit limits. Just by making requests to your card issuers, you’ve reduced your credit usage from 50% to around 33.3%.

A card issuer can approve your request if you have been a good cardholder and have always paid on time. Or, if your salary has increased, you can get one to update your earnings from your credit card company.

3. Challenge inaccurate items on your credit report

Scanning your credit report is far from exciting, so I understand the urge to skip that advice. But that would be a huge mistake. If you remove errors from your credit report, it can dramatically increase your credit score. A friend of mine raised hers by over 100 points by disputing items on her credit report.

Mistakes are much more common than many people realize. Last year, consumer reports surveyed and found that 34% of Americans found a credit report error. This gives you about a one in three chance of finding an error in your credit report.

The good news is that it’s easier than ever to stay on top of your credit report. In pre-pandemic times, you were limited to one free report per year from each credit bureau. Legally, that’s still all consumers are entitled to, but credit bureaus have been offering free weekly credit reports since the pandemic began. They plan to continue this practice until at least 2023. You can request your reports at AnnualCreditReport.com.

4. Pay your credit cards and loans on time

This last one might not be as impactful as the other tips we’ve covered, but it’s still important and worth remembering. The factor that affects your credit the most is your payment history, and it’s a simple equation.

Pay on time, and it’s good for your credit. Pay late, which technically starts when an account is overdue for 30 days, and that’s very, very bad. We’re talking “could take 140 points off your credit score” bad.

There’s no better credit habit to follow than paying all your bills on time. You will not be penalized by late fees, which is already a plus. And over time, those one-time payments add up. You might see an impact after just a few months of on-time payments. Once you’ve paid on time for a year or more, your credit will likely be much higher than when you started.

In most cases, long-term habits determine your credit score. However, these four tips can all start having an impact quickly. And if you stick with them, they will continue to pay dividends in the future.

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