4 Steps to Improve Your Credit Before the End of the Year

A happy couple with paperwork looks at a laptop.

Image source: Getty Images

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

A better credit score could be yours by the time 2021 rolls around. Here's how.

It's fair to say that 2020 has been a pretty crummy year for a lot of people, and hopefully, 2021 will be much better. A good way to help make that possible -- at least for yourself -- is to work on boosting your credit score.

Having strong credit is important. Not only can it help you get approved for a mortgage, personal loan, or car loan, but it could also spell the difference between getting approved or rejected when you want to rent a new place. As such, it's important to work on improving your credit. These moves could get you a higher score before 2020 comes to a close.

1. Pay off a chunk of existing credit card debt

One of the most important factors that goes into determining your credit score is your credit utilization ratio. This ratio measures the extent to which you're using your available revolving credit. A ratio of 30% or less will help your score improve. A good way to achieve it is to pay off some existing credit card debt. For example, if your total line of credit is $10,000 and you owe $3,600 on various credit cards, paying off $600 or more will get your utilization into better territory. Your score should see an immediate boost improve once that happens.

2. Get a credit limit increase

If paying off a bunch of credit card debt quickly isn't feasible -- especially with the holidays coming up -- another option is to ask for a higher credit limit. If you've always made your minimum payments on time, your credit card issuers may agree to one without too much persuasion on your part. That said, a higher credit limit opens the door to added spending, so if you're going to request one, make sure not to use it.

3. Apply for a new credit card -- but don't rack up a balance on it

Can't get a credit limit increase on your existing cards? Opening a new credit card is another option. But if you go this route, don't charge up a storm on that new card. That would defeat the purpose of requesting it to lower your utilization. One thing you should know is that applying for a new card may ding your credit score a little. But if you're approved, it could work wonders for your credit utilization, so it's worth the minor hit. Your credit utilization ratio carries a lot more weight than new account applications when calculating your score.

4. Correct errors on your credit report

When was the last time you checked your credit report to make sure it's accurate? You never know whether a credit bureau may have mistakenly forgotten to remove a debt you've already satisfied. Or perhaps a debt that's not yours was accidentally tacked onto your credit history. That's why it's so important to review your report for errors. If you see something that's not correct, it could be hurting your score. As such, report it and get it fixed -- your credit might improve fairly quickly. You're actually entitled to a free copy of your credit report every week during the pandemic. Take advantage and request one from each of the three reporting bureaus -- Experian, Equifax, and TransUnion.

Starting off the new year with better credit will give you more financial flexibility once 2021 begins. Take these steps, and you may be surprised at how much stronger your credit starts to look in the near term.

Alert: highest cash back card we've seen now has 0% intro APR until 2024

If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. 

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes. 

Read our free review

Our Research Expert