5 Quick Tips to Improve Credit in 2022
Whether you're feeling confident or anxious about your finances in 2022, your credit score will be a key contributor to whether you'll be able to meet your goals. Good credit means having a FICO® Score☉ of 670 or higher, and the closer your score is to the maximum of 850, the better.
Higher scores mean stronger credit and a greater likelihood a lender will want to work with you. If you're ready to commit to optimizing your credit in 2022, here are 22 ways to do it.
1. Get Credit for Monthly Bill Payments
Experian Boost™† lets you add eligible on-time phone, utility and streaming payments to your credit report, which may cause your FICO® Score to rise. It's free, but it will only affect your Experian credit report and scores. The average Experian Boost user who sees a credit score increase improves their credit by 13 points.
2. Get a Credit-Builder Loan
If you're focused on building credit from scratch or recovering after a hit to your score, a credit-builder loan from a credit union could help. You'll make fixed payments for six to 24 months, and your money will sit in a savings account you'll be able to access at the end of the loan term. In the meantime, the lender will report your on-time payments to the credit bureaus, strengthening your score.
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3. Dispute Credit Report Inaccuracies
You can get a free credit report from each of the three main credit bureaus at AnnualCreditReport.com. Check them each carefully, and file a dispute with the appropriate bureau if you find something on your report you believe shouldn't be there, such as an incorrectly reported late payment. You can also report the problem to the appropriate loan or credit card issuer, which may then update the information with the bureaus. Fixing any issues could give your credit scores a lift.
4. Pay Down Balances
The second most crucial component in your credit score is how much revolving debt you're carrying compared with your total available credit. In 2020, consumers saw a reduction in average credit card balances and, subsequently, their credit utilization ratios—helping lead to an average U.S. credit score that hit a 13-year high.
Make it a goal to reduce any high-interest credit card debt first, since that likely costs you more money in interest than, say, an auto loan or federal student loan does. Decreasing your credit card balances also shows potential lenders that you're responsible with credit. Experts suggest keeping your credit utilization below 30% of your credit limit at all times; those with the highest credit scores have a rate in the single digits.
5. Work With a Nonprofit Credit Counseling Agency
If you feel unsure about how to set up a budget or start attacking debt, a certified credit counselor at a nonprofit agency can provide a free initial consultation to discuss first steps. Credit counselors also offer debt management plans, which can help some borrowers pay down overwhelming debt.
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