MORE Tips to Improve Credit in 2023 -2024

You can improve your credit score by making on-time payments, keeping balances low and limiting new credit applications. Find more tips for improving credit in 2023 below.Last year brought inflated prices and interest rate hikes, both of which put increased pressure on households. Not only is it possible that your budget got tighter in 2023, but the cost of borrowing got higher too. That means paying a higher interest rate on credit cards, personal loans and mortgages.Fortunately, taking steps to improve your credit can help you lower the cost of borrowing. Whether you’re feeling confident or anxious about your finances heading into 2024, your credit score can 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. The higher your score, the more access you’ll have to the most favorable, least expensive loan and credit card options. And good credit can help you in other ways—like by making it easier to rent an apartment, for example. If you’re ready to commit to optimizing your credit in 2024, here are 23 ways to do it.

1. Plan to Resume Paying Federal Student Loans

Since March 2020, federal student loan borrowers have not had to make monthly payments, and interest rates have been set at 0%. That forbearance period is currently set to end in summer 2024, or when uncertainties surrounding federal student loan forgiveness are resolved. As it stands now, the status of student debt relief remains unclear. Make sure you keep abreast of the latest news on forgiveness by visiting the U.S. Department of Education’s Federal Student Aid website. You can also sign up for email updates on federal student loans.The most important factor in your credit score is payment history. Help protect your score from the adverse effects of a missed student loan payment by making sure you’re prepared for payments to resume. Review your budget to determine whether the resumed payments will stretch you financially. If you’re concerned about your ability to afford your loans long term, talk to your servicer about signing up for an income-driven repayment plan.

2. Set Up Automatic Bill Payments

The best way to avoid missing a monthly loan or credit card payment is to put your bills on autopay. Make sure you have enough money in your checking account to cover each bill to avoid an overdraft. When you know you won’t have to deal with a sudden score dip after a forgotten bill, you can focus on other ways to improve credit.

3. Pay Down Balances

The second most crucial component in your credit score is your credit utilization, and primarily how much revolving debt you’re carrying compared with your total available credit. In 2021, consumers saw a reduction in average credit card balances and, subsequently, their credit utilization ratios. That helped the average U.S. credit score rise to a record-high 714 in 2021—the fourth consecutive year of an increase.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 usually have a rate in the single digits.

4. Handle Debt in Collections

If you currently have an unpaid debt that’s gone to collections, consider negotiating it down or disputing the debt if you think it’s an error. A debt in collections is likely more than three months past due, and either the original creditor or a debt collector may be contacting you very frequently to get its payment.You have the right to request the debt collector stop contacting you, but it’s in your best interest to deal with the debt: You may pay off the debt in full or work out a negotiated settlement with the lender. Ignoring the debt could mean wrecked credit and potentially a lawsuit, eventually leading to garnished wages or a lien against your property.

5. 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, which could strengthen your score.

6. Seek Out a Secured Credit Card

Another option for building credit is to get a secured credit card. It requires a cash deposit, typically around $200, which becomes your credit limit (you may be able to provide a larger deposit for a higher credit line). You can then use the credit card as you would any other, and the deposit protects the issuer from the possibility that you won’t pay off your balance. If you use a secured card responsibly, your card issuer could upgrade you to a traditional unsecured card in the future.

7. Join an Account as an Authorized User

You can also improve credit by joining a trusted family member’s or friend’s credit card account as an authorized user. You’ll be able to use the card to make purchases, and the card’s payment history will show up on your credit report. That makes it crucial to pick someone whose credit you will benefit from. Work with the primary cardholder to pay them for your purchases, as they’ll be ultimately responsible for any balance on the card.

8. 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.

9. Get Credit for Monthly Bill Payments

Experian Boost®ø 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.

10. Keep Old Accounts Open

Even if you no longer use an old credit card, it’s typically best to keep the account open. That’s because your credit scores benefit from a long credit history and a high total credit limit. Closing established accounts will shorten the average age of your accounts and lower your total credit limit.It will take years before an account closed in good standing drops off your credit report, but the effects on your credit utilization rate are immediate. If a credit card comes with a high annual fee you can’t afford, closing the account could be a good option—or ask your issuer to downgrade the card to a no-fee version if possible.

11. Limit New Lines of Credit

When you apply for a new credit card or loan, a hard inquiry will appear on your credit report, possibly leading to a brief dip in your score. Plan to apply only for the credit you truly need, after you’ve done enough research to understand which accounts you’ll likely qualify for—and avoid new loans you may have difficulty paying—so you can help your credit improve.

12. Apply for Loans Within a Short Time Period

Lots of hard inquiries in a short time could be an indication to lenders that you’re searching for lines of credit you won’t be able to pay. Smart borrowers, though, will apply for a few loans of the same type—such as a mortgage, car or personal loan—to compare rates. For that reason, credit scorers treat multiple hard inquiries of the same loan type made around the same time as one, reducing the negative effects on your credit score. So try to submit applications within a short time frame, ideally two weeks. Keep in mind, though, that the scoring models don’t offer this same allowance for credit card applications; all of these will count individually regardless of when you submit them.