4 Ways to Transform Your Credit Score in 2022
Your credit score can make a big difference to how you live your life and what options are available to you. If you’re looking to take out a mortgage to buy a property, or a loan to help you start a new business, your credit score is one of the first things a lender will consider. The higher your credit score, the more you’ll be able to borrow – but that’s not the only way it will impact your credit. With a higher credit score you’ll also often be able to negotiate more competitive interest rates, which will ensure you’re saving money over the course of your financing. Here are my top 4 ways to transform your credit score in 2022:
1. Don’t Miss Payments
Missing credit card payments is one of the quickest ways to wind up with a poor credit rating. You want to pay at least the minimum before it’s due every month, but more is better. In order to ensure you can at least meet your minimum payments on your credit card, you might want to do a budget each month to see how much you can put towards your debt. You may need to cut back a bit on spending to get on top of your finances. It’s worth noting that achieving a great credit score takes time, but by keeping on top of your credit cards and repayments, you’re setting yourself up to make the biggest difference.
2. Decrease Your Credit Utilization
You can do this in two main ways – the first one is paying back as much of your debt as possible. There are probably some limits to how fast you can do this. You will be limited by how much available money you have to put towards your debt. So while you focus on doing that, something else you can do to decrease your credit utilization is to increase your credit limits. I suggest only doing this if you know you’ll take out higher limits, but won’t actually utilize them. If you end up using the credit limits, then you’ve got a good chance of just putting yourself into more debt and digging yourself a bigger hole.
3. Maintain Your Old Credit Cards
The more credit limit you have, but the less you’re using, works well for improving your credit score, so for that reason you want to keep your old accounts open if they’re not costing you too much in fees. You’ll need to look up what’s required to maintain the accounts you have, but it may just involve making a transaction every few months to keep it active. This will help keep your credit utilization low and your limits high.
4. Check Your Credit Report For Errors
Checking your credit report regularly is important not only to find errors which can damage your overall credit score, but also to make sure there’s no credit card fraud going on. Each twelve months you can access a free credit report and you can use that as a way to regularly comb through your reports. If you see any errors listed, you can circle them and request that they are investigated at no cost to yourself. It’s estimated that around one in five people have at least one error on their credit reports, so it’s definitely worth checking as it may impact your overall score.
Make 2022 the year that you transform your finances and free up money so you can funnel it into your business.