Banking and Finance

8 Things You Can Do to Boost Your Credit Score in 2022

Elizabeth
July 27, 2021

Did you know that the average credit score in America is 698? The state with the highest average credit score? Minnesota! The state with the lowest average score is unfortunately Mississippi with an average score of 662. However, that’s still not bad. The general cutoff for having a “good” credit score is at about 670.

This means that most people are actually doing quite well credit-wise. However, there’s usually always room for improvement. What percentage of people have “bad” credit? About 16% of the entire US population, which equates to about 5.2 million people.

This means that, first and foremost, if you have bad credit, you’re not alone. Additionally, there are numerous things you can do to increase your credit score. Learning about what lowers your credit score and how to maintain a good credit score are great places to start.

Why Your Credit Score Matters

Having a good credit score is key to unlocking great interest rates and a good financial future. What is a credit score, though, and why is it so important for getting good rates?

​​A credit score is a number that lenders use to assess the risk of loaning you money. The higher your score, the more likely you are to get approved for a loan and the lower your interest rate will be. A low score could prevent you from getting a loan altogether. 

Your credit score is important because it can impact your financial future in a number of ways. For example, a high score could help you get approved for a mortgage or car loan with a low interest rate, saving you thousands of dollars over the life of the loan. A low score could result in you paying higher interest rates on loans, or being denied loans altogether. 

In addition, your credit score can impact your insurance rates and even affect your ability to rent an apartment. As you can see, your credit score matters – so it’s important to do everything you can to maintain a high credit score.

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How Long Does it Take to Improve Your Credit Score?

So, you want to build credit fast, huh? How long does it actually take to improve your credit score

It can take anywhere from a few months to a couple of years to improve your credit score, depending on how low it is to start with and what actions you take to improve it. If your score is very low, you may need to take some major steps to get it up, such as paying down debt, correcting errors on your credit report, or adding positive information. However, if your score is only slightly below average, you may be able to make some small changes that will have a big impact. 

Either way, the most important thing is to be patient and consistent; big improvements can take time, but even small steps in the right direction will eventually add up.

8 Ways to Boost Your Credit Score

Want to learn how to improve your credit score in 30 days? While you can’t necessarily boost your credit score overnight, you can learn how to build credit so that you can, over the course of a few months, begin to see an increase in your score that will lead to better interest rates for you.

Here’s what to know about how to build credit and boost your finances. If you haven’t already, before getting started, make sure you check your credit score on your credit report.

1. Make Payments On Time

Payment history is one of the most important factors in determining your credit score. When you make your payments on time, it shows that you're a responsible borrower and that you're likely to repay your debts. As a result, your credit score will increase. 

Additionally, by making on-time payments, you can avoid late fees and other penalties, which can further improve your financial standing. So if you're looking to improve your credit score, be sure to keep up with your payments.

2. Lower Your Credit Utilization

Credit utilization is the ratio of your credit card balances to your credit limits. It's calculated by dividing your total revolving credit card debt by your total credit limit. For example, if you have a $1,000 balance on a credit card with a $5,000 limit, your credit utilization would be 20%.

A high credit utilization rate can hurt your credit score. That's because it looks like you're maxing out your credit cards, which suggests you're relying too heavily on borrowed money. 

Lowering your credit utilization rate is one of the most effective things you can do to improve your credit score. By paying down your balances and keeping them below 30% of your credit limits, you'll show creditors that you're using borrowing responsibly and managing your debt load well.

3. Watch Your Hard Checks

A hard credit check is when a lender checks your credit in order to make a lending decision. This can include things like applying for a loan, opening a new line of credit, or even just checking your credit score. Hard credit checks can impact your credit score, so it's important to be aware of them. 

Hard credit checks can be bad for your credit score because they can lower your score by a few points. This is because when you have a hard credit check, it shows that you're trying to get new credit, which can be a red flag to lenders. 

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4. Reduce Your Overall Debt

One easy way to improve your credit score? Focus on reducing debt! Reducing your debt can improve your credit check for a few reasons. 

First, it can lower your credit utilization ratio, which is the amount of debt you have compared to your credit limit. A lower ratio indicates to lenders that you're a responsible borrower who doesn't max out your credit cards. Second, paying off debts shows lenders that you're capable of making on-time payments, which is an important factor in calculating your credit score. 

Finally, reducing your debt frees up more of your monthly income, which may make it easier to keep up with future payments. In short, reducing debt is a smart move for anyone looking to improve their credit check.

5. Don’t Apply for Credit You Don’t Need

Every time you apply for a new line of credit, it generates a hard inquiry on your credit report. inquiries can stay on your report for up to two years and can ding your score by a few points each time. If you're constantly applying for new lines of credit, it can signal to lenders that you're desperate for cash or unable to manage your finances. 

Additionally, each new account comes with its own set of monthly payments and interest rates. By taking on more debt than you can handle, you're putting yourself at risk of falling behind on payments and damaging your credit further. So before you apply for that store credit card or car loan, be sure to ask yourself whether you really need it. Your credit will thank you in the long run.

6. Don’t Close Old Accounts

When you're trying to improve your credit score, it can be tempting to close old accounts that you no longer use. After all, a lower balance will mean a lower credit utilization ratio, and that can help to boost your score. However, closing an account can also have the opposite effect. 

One of the factors that is used to calculate your credit score is your credit history, or the length of time that you have been using credit. Therefore, closing an old account can shorten your history and actually lead to a lower score. Additionally, closing an account can also increase your credit utilization ratio, as it will remove available credit from your overall total.

7. Get Added as an Authorized User

If you're looking to improve your credit score, one option is to become an authorized user on someone else's credit card account. When you're an authorized user, you're able to piggyback off the credit history of the primary cardholder, which can help to improve your credit score. 

Additionally, becoming an authorized user can also help you to build a positive credit history if you don't have one already. And, if you use the account responsibly, you can also improve your credit utilization ratio, which is another factor that impacts your credit score.

8. Be Patient!

And finally, our last tip for boosting your credit score is to simply be patient.

It takes time to establish a strong credit history, and there are a few things you can do to help speed up the process. 

First, make sure you're using credit intelligently. This means using it only when you need to and paying your bill in full and on time every month. Second, don't be afraid to ask for help if you need it. There are plenty of resources available to help you build credit, so take advantage of them. And finally, remember, Rome wasn't built in a day, and neither is your credit history.

Maintain Your Credit Score

Learning how to build and maintain good credit takes time. Go through the tips above and see what you can implement now and how you can work to improve your credit over time.

In the meantime, stay tuned for Cheese’s credit builder product!

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