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Want to start 2023 on better credit? Here are some steps you can take.
Key Point
- Reducing credit utilization by reducing card balances and increasing credit limits is a quick way to improve credit.
- Pulling a credit report or disputing an error can also have a big impact.
- Make sure to pay your account on time to build a strong payment history.
If you’re looking for financial goals for the rest of the year, it’s a good idea to boost your credit score. It’s only a few months away, so there’s still time. It also has many potential benefits, such as being able to qualify for the best credit cards and pass any kind of credit check you come across.
Credit scores may seem complicated, but improving your score is not that difficult. By following a few simple credit hacks, you can make significant progress by 2023.
1. Clear your credit card balance
One of the best ways to quickly improve your credit score is to pay off all your balances. This helps with outstanding balance, also known as credit utilization, which is a big factor in your credit score.
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Here’s how it works: Each month, the credit bureau divides the balance on your card by your credit limit. For example, if your balance is $5,000 and your credit limit is $10,000, your utilization is 50%. The lower the number, the better, as it indicates that you are not using too many credits. Too high, like 30% or more, can lower your credit rating.
If you’re using a lot of credit, make a serious effort to increase your credit card payments. For example, going from 60% to 25% credit utilization can have a big positive impact.
2. Ask your card issuer to increase your credit limit
There is also another way to improve your credit usage, which is less hassle on your part. Request a credit limit increase for all credit cards you have. Each time your credit line goes higher, your credit utilization will go down, assuming your balance stays the same.
Let’s say your balance is $5,000, your credit limit is $10,000, and your credit utilization is 50%. You then request an increase, at least some of which is approved, resulting in a credit limit of up to $15,000. Simply submitting a request to the card issuer reduced my credit utilization from 50% to about 33.3%.
Your card issuer may approve your request if you are a good cardholder and consistently pay your bills on time. You can get one to renew your income with
3. Disputing Inaccurate Items on Your Credit Report
Scanning credit reports is nothing exciting, so I can understand the temptation to skip this tip. But that would be a big mistake. If you can eliminate errors from your credit report, you can dramatically improve your credit score. A friend of mine disputed an item on her credit report and raised her points over her 100 points.
Errors are much more common than many realize. last year, consumer report A survey found that 34% of Americans had found an error on their credit report. This reduces the chance of finding an error in your credit file by about one-third.
The good news is that it’s easier than ever to keep track of your credit report. In the pre-pandemic era, he was limited to one free report per year from each credit bureau. Legally, this is all consumers are entitled to, but credit bureaus have been offering free credit reports every week since the early days of the pandemic. They plan to continue this practice until at least he 2023. The report can be requested at AnnualCreditReport.com.
4. Pay your credit cards and loans on time
This last tip may not be as impactful as the others we’ve covered so far, but it’s still important and worth keeping in mind. The factor that affects your credit the most is your payment history, and it’s a simple equation.
Pay on time, it’s good for your credit. Technically, payments are delayed when your account is 30 days past due. This is very bad. We say, “You can lose 140 points from your credit score.”
There is no better credit habit to follow than paying all your bills on time. Never worry about late fees. This is already a plus. And over time, these on-time payments add up. See results in just a few months of on-time payments. If you make your payments on time for a year or more, your credit can be much higher than when you started.
Most of the time, it’s a long-term habit that determines your credit score. However, all four of these tips can start to pay off quickly. And if you stick with them, they will continue to pay dividends going forward.
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