How To Send Your Credit Score Soaring in 2022

Will 2022 be the year your finances take off? Start by checking your credit score and improving it with these tips.

How much do you know about credit scores? Do you know what your credit score is right now? Or do you just know that it’s a three-digit number that causes a lot of people stress? While that may be true for some people, it doesn’t have to be true for you. By taking the time to research your credit score – and by learning about what you can do to fix it – you can think about your credit score without being stressed.

With time and effort, you can improve your credit score. The first step is to commit to the process and to improving your financial health. We’ve gathered information about credit scores and what you can do to improve your score. Here, you’ll first learn about why your credit score is important, and then you’ll find out what you should do to fix it. 

Why Is Your Credit Score Important?

Your credit score is like a grade for your financial health. You can think about your credit score like it’s your report card. The higher your credit score, the better your grade is, and the more life opportunities you’ll have. (It may not always be true for report cards, but it’s true for credit scores!)

For example, your credit score affects your housing situation no matter if you’re buying or renting. When renters apply for housing, their potential landlord can check their credit score and decide if they get to rent from them or not. If the score is low, the landlord may choose not to approve the application, making it more difficult to find housing.

It’s a similar story for people looking to buy a home. When you’re ready to sign on the dotted line, your credit score will affect your mortgage rate (along with a number of other factors). 

How about a new (or used) car? Your credit score can affect your approval for an auto loan. Also, you could end up paying a high daily interest if your credit score is low. It’s not just housing and cars that credit scores affect. It can even impact your cell phone plan and the deposit you have to put down on your utilities. 

Good credit can make your life easier and can save you money by approving you for low-interest rates. So if your credit is low or just not where you want it to be, now is the time to step up and take actions to fix it.

What To Do First To Improve Your Credit Score

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The first thing you need to do on your credit score journey is find out what your score currently is. Everyone has more than one credit score because there are 3 different credit bureaus that report this information. 

You can go to AnnualCreditReport.com to see your full credit report. Or you can sign up for an account with CreditKarma (be aware that CreditKarma will send you advertisements unless you opt-out) to find out your scores. CreditKarma lets you check your scores frequently. 

If your credit score is low, then you need to take action immediately. Start by paying off any debts that you can. If you have any debts that have gone to collections, you should take care of those first. For large debts, see if you can arrange a payment plan so you can start paying them down steadily.

Next, find out if there is a credit union near you. Open an account and see if you have the option of setting up a secured credit card. With a secured credit card, you put a certain amount of money down (usually it’s $300). In exchange, you will receive a credit card with a limit that matches the amount you put down. 

Use your secured credit card for a small recurring bill. Make sure that you pay it off in full each month. Soon, you’ll see your score start to improve! Some credit unions and even banks offer secured loans instead of secured credit cards. Make sure to research the options in your area and choose what works best for you.

Remember, if your credit score is very low you need to start with these steps first. However, if your score is average, you can skip this section and go straight to the next step.

Set Up AutoPay for Your Bills

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If you haven’t set up autopay for your bills yet, here’s your sign: do it now! Autopay is so convenient, and it’s an easy way to improve your score. It’s a lifesaver for many people and is usually available for your utilities, recurring bills like streaming services and gym memberships, and more. Most companies will allow you to set up autopay online, but if you’re having any issues, call the company directly or visit a location that’s close to you. Of course, bring your debit card or your credit card with you when you go!

Remember, only give out sensitive information over the phone if you are 100% confident that you are speaking to an actual representative of the company. Scammers are always trying to steal information, so be on the lookout and double-check that you have the right number! If you’re unsure that you’re talking to a legitimate representative of the company, hang up the phone and go to the business in person if you can. 

By setting your bills on autopay, you’ll never miss a payment – and missed payments can tank your credit score. If you have a rewards credit card, set your bills to autopay via that card. However, make sure that you pay off the credit card every month, otherwise, you’ll be paying a high credit card interest rate on your regular recurring bill, and that’s a huge waste of money!

Check Your Credit Report For Mistakes

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Cover your bases first. Handle any debt that’s gone to collections, take concrete actions to start building your credit, and set your bills on autopay so you never miss a payment. 

Then it’s time to check your credit report for mistakes. Again, go to AnnualCreditReport.com and check your report. This time, instead of just looking at your scores, pay close attention to what’s listed on your report. 

Check to make sure that all the information is accurate. There might be an open account that doesn’t belong to you. Or your report may include missed payments that aren’t actually yours.  If you notice any mistakes, it’s time to take action and dispute it. Report the error to the bureau and follow-up if you don’t see it fixed on your credit report. 

If You Have Student Loans, Plan Ahead

While student loan repayments aren’t active right now, make sure you plan ahead for when payments resume. If there’s enough room in your budget for you to pay them down while you’re waiting, then you should! However, many former students simply can’t afford to pay on their loans.

Whether you have room in your budget now or not, prepare for when payments resume in May 2022. A missed student loan payment could seriously damage your credit score. Save up ahead of time, or see if it’ll be possible for you to have a lower monthly payment based on your income. Take care of it now before it’s time to start repayments!

Use Less of Your Credit

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This is a lesser-known but important way to improve your credit score. Decrease your credit utilization rate and you’ll see your score improve. But what does that mean? 

So, you already know that your credit card has a limit. If you only have one credit card and your limit is $1,000, and you charge $500 to that card, then your credit utilization rate is 50% – and that’s pretty high. 

Keep your credit utilization rate low and you’ll see your credit score improve. To do this, cut down on your spending and pay off your balance in full and on time. There’s also another option: apply for another credit card, but limit your spending. You’ll increase your amount of available credit if you’re approved for another card.

Stick to Your Budget

All of these recommendations are easier said than done, and this is one of the harder recommendations. However, it’s so important to your financial health. While it’s not easy to stick to a budget, doing so will keep you on track. You’ll be able to pay off your bills on time and you won’t have to stress about not knowing how much money is in your account. The joy you’ll feel when you realize that you’ve stuck to your budget is more than worth it!

How Often Should You Check Your Credit Score?

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At the bare minimum, you should check your credit report once a year. However, that’s not enough. Experts suggest that you check your score once a month or at least, once a quarter. Unless you check your score, you won’t know if there are any errors that you need to dispute. Make sure you check them regularly!

It’s up to you to put these steps into action! Remember, improving your credit score takes time and effort, but the results can change your life. 

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