The current economic climate, marked by rising inflation, has made it more challenging for individuals to manage their finances effectively. As prices of goods and services increase, so does the burden of debt, making it crucial to maintain a healthy credit score. A good credit score is essential for securing loans, mortgages, or even getting approved for a credit card. Here are some strategies to boost your credit score in 90 days, despite the challenges posed by the current economy:
1. Take Out a Personal Loan
Credit card debt can be overwhelming, especially with the high-interest rates associated with store cards. Taking out a personal loan with a lower interest rate can help you consolidate your high-interest debts into one manageable monthly payment. This not only helps save money on interest but also improves your debt-to-income ratio, a key factor used by lenders to determine creditworthiness.
2. Make Payments on Time
Timely payments are crucial as both VantageScore and FICO consider your payment history as a major component in determining your credit score. Late payments can stay on your credit report for seven years or longer, so it’s imperative to make all payments on time. If you happen to miss a payment, contact your creditor immediately to make the payment and request that they refrain from reporting the late payment to credit bureaus.
3. Maintain Low Credit Utilization
Credit utilization, the percentage of your available credit that you are using, significantly impacts your credit score. Lenders prefer a credit utilization score below 30%, but the lower it is, the better your score will be. Aim to use no more than 30% of your credit limit on any of your credit cards, and if possible, reduce your balances to 10% or below.
4. Sign Up for a Low-Interest Credit Card
High-interest rates can prevent your payments from making a significant impact on your debt. If you have credit card accounts with exorbitant interest rates, consider low-interest credit cards that offer balance transfers. Transferring your balances to a new account with a lower interest rate can help you save money on interest each month. However, avoid applying for multiple accounts at once as credit inquiries negatively impact your credit score.
5. Don’t Close Old Accounts
Closing an account, even one that you don’t actively use, can negatively affect your credit score as it reduces your overall available credit and increases your utilization rate. Also, closing accounts like a paid-off car loan reduces the variety of credit lines you have, so be cautious about what you pay off and when.
6. Request Higher Credit Limits
Requesting credit line increases on your existing credit card accounts can increase your available credit, thereby decreasing your credit utilization and potentially boosting your credit score. Since you already have an account with the lender, your credit won’t be pulled, which could otherwise negatively impact your credit score.
7. Become an Authorized User
Becoming an authorized user on a credit card account of someone close to you, such as a parent or spouse, can increase your available credit without opening a new account. Ensure that the card reports authorized user accounts to the credit bureaus and that the primary account holder maintains excellent usage habits, including timely payments and low credit utilization.
Final Thoughts
Boosting your credit score in 90 days is achievable with a strategic approach and disciplined financial habits. Despite the challenges posed by the current economy and rising inflation, these strategies can help you improve your creditworthiness and secure a brighter financial future. Remember, a good credit score is not just about securing loans or credit cards; it is a reflection of your financial health and responsibility.
