How To Refresh Your Credit In 6 Easy Steps

Stacy J
Jul 14, 2022
4 min read

This article is from our print magazine issued July 1st 2022. To order a copy of the magazine please do so here.

Your credit score impacts numerous areas of your life, from buying a house to applying for credit cards. If your credit score needs a refresh, look no further! Here are six easy ways to improve your credit.

1. Check your credit report

It may seem like a no-brainer, but checking your credit report is one of the most important things you can do for your credit score. Reviewing these reports can notify you of any mistakes, like an incorrect name, address, or Social Security number, which can significantly impact your score.

Your credit report can also help you become aware of your current credit position. Using Credit Karma, you can learn specific tips for increasing your credit score based on your credit history, which you can then put into action to give your credit score a quick refresh.

2. Pay off your credit card bill on time

The most crucial factor impacting your credit score is on-time payment history. Missing a payment can negatively impact your credit score, so the most significant way to get your credit in good shape is never to miss a payment. Even if you have a lot of credit card debt, the most important thing is to make sure you are at least making the minimum payment on every credit line.

One way to do this is by setting up auto-pay with all your credit accounts, which links your bank account to make monthly payments automatically, so you don’t have to worry about forgetting. Typically, you can make either the minimum payment or the entire balance. Paying in full is always the best option, but the minimum is still a good place to start.

3. Ask for a credit limit increase

Another factor that can impact your credit score is your utilization percentage. Lenders want to know you aren’t maxing out every credit line and being risky with your purchases, so try to keep this under 20% if possible. A quick way to lower your utilization is to ask your credit card company for a credit limit increase. This will increase the amount of credit available to you and reduce the percentage being utilized. Just be sure not to add more debt to your newly increased line.

4. Strategically pay off your credit card balance

As we mentioned earlier, utilization plays a significant factor in your credit score. Another way to lower this is by paying down any balances you have on your credit cards. There are a few different ways to do this. One way is called the debt snowball. This is where you start by paying off the smallest debt balance and then move to the next smallest balance. Doing this will create a momentum of paying off your debt, encouraging you to continue.

The other method is the debt avalanche. This involves paying off the credit card with the highest interest rate first and continuing with lower and lower interest rates, saving you the most money in interest payments and costing you less in the long run. It’s up to you to decide which method you think is best for your situation.

5. Use credit builder cards

A recent tool available from many companies today is called a credit builder card. This card works like a debit card, linking to your bank account to pay off your purchases immediately, so you don’t carry a debt balance. The best part is that these cards report to the credit bureaus, so they can quickly improve your score by building up a positive payment history. Some cards even offer cash back, like a credit card, but without the worry of accruing debt.

6. Apply for 1-2 new credit cards each year

Another factor impacting your credit score is your number of open credit lines and the average age of credit lines. When handled responsibly, having more lines of credit looks good to credit bureaus, and the longer an account has been open, the better. As a result, opening one or two new credit cards a year can positively impact your score.

Doing this allows you to have more credit available to you, which decreases your utilization, and as time passes, the average age of your credit will increase. In the short term, your score may slightly lower due to a hard inquiry, but it will be positive in the long run. However, stick to only opening one or two cards annually; credit bureaus see it as risky if you go overboard with new credit cards.

While improving your credit score will require some strategy and effort, it doesn't have to be complicated! Make your payments on time, stay consistent, and watch your credit score skyrocket in the months to come!

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