Your credit score matters a lot as you navigate your way past the various roadblocks life sets in front of you. An acceptable or an excellent credit score gives you a lot more financial freedom. One that needs improvement can inhibit you significantly.
As we approach the year 2022, there are a few steps you can take that should get your credit score heading in the right direction if it’s not currently where you’d like it to be.
Devise a Strategy for Paying Back Debt
Having outstanding debts is the biggest way to drag down your credit score. As long as it remains below an acceptable level, you’ll have trouble securing a mortgage, buying a car, taking out a loan to pursue your higher education, and so forth. However, there are proven techniques that should help you pay off your outstanding debts, and will also help improve your credit score.
You might use the snowball debt plan. This is a strategy where you pay off your debts at an accelerated rate. You list any debts you have from the smallest to the largest. Then, you earn money each month to put toward the smallest debts first, making the monthly minimum payments on any others. Once you’ve paid off the smallest one, you move to the next on the list.
You might also use the debt avalanche method, where you pay down debt starting with the loan with the highest interest rate, then moving on to the next one. Whichever strategy you choose, less debt means your credit score should rise steadily.
Look Into Getting a Credit Limit Increase
Maybe you’re entering 2022 and not carrying a balance on any of your credit cards. Still, your credit score is not where you’d like it to be.
If so, you might give it a boost by asking credit card companies to raise your spending limit. This is a way for you to improve your credit utilization ratio. This ratio measures how much your spending limit is across all your credit cards versus how much you’re using. If you’re using little or none of your available credit, that raises your credit score.
Increasing the credit limit on your cards can raise your score with minimal effort. Be wary of spending more on your cards because you raised the limit. As long as you remain frugal with your spending, this technique should increase your score without any fiscal risk.
Check Up on Any Credit Report Errors
You might look at your credit report and feel like the number is lower than it should be. You don’t have any outstanding loans or a mountain of credit card debt, so why don’t you have a more robust credit score?
Often, the reason is that there are errors on your credit report of which you may not be aware. Some mistakes can severely impact your score. Correcting these errors can make a difference if your goal is a healthier credit score in 2022.
Peruse your credit report and see if there are any loans in your name that you never took out. It’s always possible that someone with a name similar to yours took out a loan, and it was mistakenly attributed to you. Getting any mistakes resolved can lead to a much better-looking credit score in no time.
Improving Your Credit Score is Not as Impossible as It May Seem
Individuals who are coming off of bankruptcy or who made some financial mistakes in the past can look at a low credit score and feel discouraged. You should try to remain optimistic about the situation, though.
Just because you made some fiscal errors in the past, that does not mean you can’t gradually improve your score by being responsible from this point forward. In addition to the suggestions we made, you can also live within your means and make sure to pay your mortgage, utilities, or rent on time. These measures should all cause your credit score to rise incrementally.