Could a Side Hustle Help Boost Your Credit Score?

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  • Income isn't a direct factor when determining a credit score.
  • But earning more money could help you keep up with your debt, thereby helping your credit score.

The quick answer? Yes, but indirectly.

If it seems like half the people you know have a side hustle these days, you're not alone. Side hustles have become increasingly popular, and many people are picking up second jobs to boost their savings or better manage their living costs in the face of inflation.

If you get yourself a side gig, it could help you meet different financial goals, like buying a home or building an emergency fund, or just plain give you more flexibility with everyday bills. But here's another benefit you might reap -- a higher credit score.

How a side hustle can help your credit score

Getting a side hustle will not directly increase your credit score. That's because income isn't a factor in calculating that number.

Rather, here's what goes into your credit score:

  • Your payment history, which speaks to how timely you are with bills
  • Your credit utilization ratio, which shows how much of your revolving credit you're using at once
  • The length of your credit history, which shows how long you've had credit accounts open
  • Your credit mix, which shows what type of borrowing you're doing
  • New credit accounts, which speaks to how many loans or credit cards you've recently applied for

As you can see, the amount of money you earn doesn't directly play into any of these categories. But it could have an indirect impact.

The more money you earn, the less likely you'll be to fall behind on your bills. In that regard, getting a side hustle could make it so you're less likely to be late with payments.

Plus, if you earn more money, you may not have to carry such a high credit card balance. Boosting your income with a side hustle could also help you whittle down an existing credit card balance, thereby helping your credit utilization ratio improve.

Finally, an income boost could make it so you don't have to apply for as many loans or credit cards in the first place. And fewer recent credit accounts means fewer hard inquiries on your credit record, which can lower your score (albeit not to such an extreme degree, since a hard inquiry will commonly only result in a five- to 10-point drop).

Should you get a side hustle?

If your goal is to boost your credit score, a side hustle could make that possible, while potentially helping to eliminate some of the financial stress you may be under. If you take on a side hustle and use that money to pay bills on time and chip away at existing credit card debt, it could have a significant impact on your credit score, making loans more affordable when you need to borrow.

The gig economy is loaded with opportunities to pick up work on top of your main job, so it pays to explore your options. Even if you only have a couple of hours a week to dedicate to a side hustle, it could still help shape your finances -- and credit score -- for the better.

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