How to Improve Your Credit Score in 2023
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How to Improve Your Credit Score in 2023
Your credit score is a number or alphabet that reflects your creditworthiness and how likely you are to repay your debts. It can affect your ability to get approved for a lease, home loans, credit cards and other financial products. A higher credit score can also help you get better interest rates and terms from the banks.
If you want to improve your credit score in 2023, here are some tips and advice from experts that you can follow:
1. Check your credit reports for errors
The first step to improving your credit score is to know where you stand. You can get a free copy of your credit report from each of the major credit bureaus. Experian or TransUnion.
Review your credit reports carefully and look for any errors or inaccuracies that could be hurting your score. For example, you might find accounts that don't belong to you, payments that were reported late when they were not, or balances that are incorrect. If you find any errors, you can dispute them with the credit bureau and the creditor to have them corrected.
2. Pay your bills on time
Your payment history is the most important factor in your credit score. This means that paying your bills on time every month is the best way to boost your score and show lenders that you are responsible with your finances.
To avoid missing payments, you can set up automatic payments, reminders or alerts for your bills. You can also contact your creditors if you are having trouble making payments and ask for a payment plan that could help you avoid late fees or negative marks on your credit report.
3. Keep your credit use low
Your credit use is the percentage of your available credit that you are using. It is the second most important factor in your credit score. A high credit utilization can indicate that you are overextended and may have difficulty repaying your debts, this is shown by a low affordability score.
You can lower your credit utilization by paying off some of your debt, requesting a higher credit limit from your card issuer (but not using it), or transferring some of your balance to a lower interest card.
4. See if you could get an instant score boost
Some credit bureaus offer programs that can help you improve your credit score instantly by adding positive information to your credit report. For example, Experian Boost allows you to link your bank account and get credit for paying utility bills, phone bills and streaming services on time. TransUnion Boost allows you to add rental payments to your credit report if you pay through their partner platforms.
These programs are free and easy to use, and they could give you a few extra points on your score without changing anything else in your financial behaviour.
5. Avoid applying for new credit too often
Every time you apply for new credit, the lender will perform a hard inquiry on your credit report, which can lower your score by a few points. Hard inquiries stay on your report for two years, but they only affect your score for one year.
To minimize the impact of hard inquiries, you should avoid applying for new credit too often or too close together. Only apply for credit when you really need it and when you are confident that you will get approved.
Conclusion
Improving your credit score is not a quick or easy process, but it is worth it in the long run. By following these tips and advice, you can gradually increase your score and enjoy the benefits of having good credit in 2023 and beyond.
Sources:
How To Improve Your Credit Score, Tips & Advice | Experian 2: How to improve your credit score | TransUnion South Africa 3: How to build your credit score from scratch | ClearScore ZA 4: How to Improve Your Credit Score Fast - Investopedia 5: 23 Ways to Improve Credit in 2023 - Experian
Author: HPM Article July 2023
