4 Easy Ways to Boost Your Credit Score by the End of the Year

Want to kick off 2023 with better credit? Here are a few steps you can take.

If you're looking for a financial goal for the rest of the year, boosting your credit score could be a great choice. It's something you could do in just a few months, so you still have time for it. And there are lots of potential benefits, like qualifying for the best credit cards and being able to pass any sort of credit check you encounter.

Credit scores may seem complicated, but improving yours isn't too difficult. By following some easy credit hacks, you could make quite a bit of progress by 2023.

1. Chip away at your credit card balances

One of the best ways to raise your credit score fast is to pay down any balances you're carrying. This helps with your amounts owed, also called your credit utilization ratio, which is a big factor in your credit score.

Here's how it works: every month, the credit bureaus divide your card balances by your credit limits. For example, if you have $5,000 in balances and $10,000 in credit limits, your utilization would be 50%. The lower this number is, the better, because it shows you don't overuse your credit. If it's too high, like 30% or more, it may lower your credit rating.

If you're using a lot of your credit, try to make a serious push towards paying more on your credit cards. Going from, say, 60% credit utilization to 25% can make a large positive impact.

2. Ask your card issuers for a credit limit increase

There's also another way to improve your credit utilization, and it doesn't take much work on your part. Request a credit limit increase for all the credit cards you have. Each time you get a higher credit line, it lowers your credit utilization, assuming you keep your balances the same.

Let's once again say that you have $5,000 in balances and $10,000 in credit limits, for a 50% credit utilization. You then ask for increases, and at least some of them are approved, bringing you up to $15,000 in credit limits. Just by putting in requests with your card issuers, you've lowered your credit utilization from 50% to about 33.3%.

A card issuer may approve your request if you've been a good cardholder and consistently paid on time. Or, if your salary has gone up, you could get one for updating your income with your credit card company.

3. Dispute inaccurate items on your credit report

Scanning your credit report is far from exciting, so I understand the urge to skip this tip. But that'd be a huge mistake. If you get errors removed from your credit report, it can dramatically boost your credit score. A friend of mine raised hers by over 100 points by disputing items on her credit report.

Errors are much more common than many people realize. Last year, Consumer Reports investigated and found that 34% of Americans found a credit report error. That gives you about a one-in-three chance of finding an error on your credit file.

The good news is that it's easier than ever to stay on top of your credit report. Way back in the pre-pandemic days, you were limited to one free report per year from each credit bureau. Legally, that's still all consumers are entitled to, but the credit bureaus have been offering free weekly credit reports since early in the pandemic. They're planning to continue this practice at least through 2023. You can request your reports at AnnualCreditReport.com.

4. Pay credit cards and loans on time

This last one might not be as impactful as the other tips we've covered, but it's still important and worth remembering. The factor that affects your credit the most is your payment history, and it's a straightforward equation.

Pay on time, and it's good for your credit. Pay late, which technically starts when an account is 30 days past due, and it's very, very bad. We're talking "could take 140 points off your credit score" bad.

There's no better credit habit to follow than paying all your bills on time. You won't get dinged with any late fees, which is already a plus. And over time, those on-time payments add up. You could see an impact after just a few months of on-time payments. Once you've been paying on time for a year or more, your credit will likely be much higher than when you started.

For the most part, it's long-term habits that determine your credit score. However, those four tips can all start making an impact quickly. And if you stick with them, they'll continue to pay dividends going forward.