7 Ways to Improve Your Credit in 2023

The new year is almost here! Are you hoping to see your credit score improve through the next 12 months? We put together 5 simple ways you can build credit better than before.

5 Ways To Build Credit

1. SPEND UNDER 30% OF YOUR CREDIT CARD LIMIT

People who max out their credit cards are less likely to repay their debts on time than people who only spend very little. Credit bureaus like Equifax and TransUnion consider this when calculating a person’s credit, so it’s better to stay well under your credit limit. If you’ve been making credit card payments on time and aren’t seeing an improvement in your score, this could be why! We recommend limiting your credit card purchases to necessities and paying them off as soon as you can. This reduces the costs of interest and builds credit.

2. LIMIT YOURSELF TO 1-3 CREDIT CARDS

Having too many credit cards can hurt your “credit utilization rate.” Essentially, if you have high amounts of credit debt against the total amount of credit available to you, this can hurt your score. You also may find that having more than three credit cards is tougher to manage, increasing the odds of overspending or late payments.

It’s much easier to track transactions with fewer cards. Having more than one card is useful if you find one of your cards has suspicious activity and need to cancel it. But if you have too many, you may find it harder to watch for suspicious activity across all the accounts!

Ultimately, the right amount of cards is unique to you. Just be careful not to apply for many within a short period, as these cause hard inquiries and can hurt credit. This brings us to our next tip!

3. LIMIT YOUR HARD INQUIRIES

Whenever you apply for a loan (whether that be a mortgage or car loan) or credit card, the lenders will request your credit score from Equifax or TransUnion. If too many of these are performed within a short time, it’ll hurt your score and make you less likely to get approved on the following applications.

If you apply for a loan and have great credit, you could apply for a loan after as little as 3 months. However, for those with poorer scores, it may be worth waiting as long as 9 months. Note that hard inquiries are different from soft inquiries, which refer to when you request a credit report. You’re entitled to a free credit check once per year. Consider checking now and again at the end of the year to see how well you’ve improved!

4. MAKE NEW PAYMENTS ON TIME

Credit proves that you’re trustworthy to lenders, so it makes sense that this is one of the biggest factors in protecting your credit. Some myths claim that it’s good to have some credit card debt at all times, but this isn’t true. Paying off your debts consistently and on time creates a strong record. One way to make sure you achieve this is by using a calendar or spreadsheet to track payment due dates for phone bills and more. See more credit myths here!

5. DISPUTE CREDIT REPORT INACCURACIES

When you request a credit report from Equifax or TransUnion, look through the items that you’re negative on. Not all negative items should last the same amount of time. Late or missed payments should last 6 years, consumer proposals should last 3–6 years, and bankruptcies last 6–14 years. If an item has stayed past this timeframe, that likely means an error occurred.

Double-check information regarding your name, mailing address and so on to prevent your credit report from getting details mixed up with someone else’s.

You can make disputes by consulting a consumer affairs office, Equifax, TransUnion and debt collection agencies.

SECURE CREDIT CHECK

To build your credit, you need to know where you stand. We can provide you with a free credit report so you can start rebuilding your credit today with our Secure Credit Check! Need help making a plan? Reach out to any of our  Financial Services Managers and we’ll help you improve your credit!