Five simple things you can do to boost your credit score this year – MarketWatch
You’ve got big financial plans for 2023. Maybe they include buying a home or car, or getting a new travel rewards credit card to help pay for your next trip. There’s a key piece of these plans you may not have considered: building your credit score.
A better credit score can expand your access to credit and make borrowing more affordable. For example, having a score of 700 versus 650 could mean getting approved for a new car loan at 4.9% interest instead of 7.25% interest.
So what can you do to get your score in shape? Here are a few ways experts suggest boosting credit in the new year.
1. Pay off holiday debt
When holiday festivities conclude, you might be stuck with leftover debt from food, travel and gift purchases (on top of regular bills, of course).
If missed payments or large balances carry over into the new year, your credit score could suffer. Payment history (whether you pay bills on time) and credit utilization (the amount of credit you’re using compared with your limit) are the two biggest factors that affect your credit score.
So make a plan to pay down your holiday debt. Start by reviewing your account statements to understand exactly how much you owe and how much you can afford to budget for repayment, says Jeff Arevalo, a financial wellness expert at GreenPath, a nonprofit credit counseling agency based in Farmington Hills, Michigan.
“If you’re only paying minimums, unfortunately, it’s going to take you a longer time to pay the debts. Interest rates have increased, and so paying minimums is not a recipe for success,” Arevalo says. Knowing your budget allows you to see if you’re in a position to make more than the minimum payments on your debts, he adds. Perhaps you earned an extra paycheck in December or a holiday bonus that you can put toward debt.
One strategy to consider is paying above the minimums on your most recently opened accounts first, says Todd Christensen, education manager at Money Fit, a nonprofit debt relief service based in Boise, Idaho. Christensen says this strategy, which he refers to as “debt landslide,” can build credit since FICO
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and VantageScore scoring companies give more weight to activities on new and recently used accounts.
“Paying down balances on new accounts will help build credit faster than paying down the balance on all accounts,” Christensen says.
Protect your credit score in 2023 by setting up automatic payments or payment reminders to help you pay bills on time …….