A higher credit score can open the door for lower interest rates on auto loans, mortgages, and more. For this reason, having a higher credit score could save you a lot of money over the course of a loan. If you’re looking to build your credit score in 2022, here are nine credit-building tips to help boost your credit score and open new financial opportunities.
Pay on time
The first and most important of our credit-building tips is to do your best to pay your credit card and all monthly credit bills on time. Paying the minimum amount due is still considered on time. A single late payment can lower your credit score and could stay on your credit report for several years. Payment history makes up 35% of your FICO score, the most common credit score reporting method used by lenders.
Keep your oldest credit account open
Your credit history takes into account how long you’ve had credit. That’s why rather than boosting your score, keeping your oldest account open can help keep your score from dropping. Whichever credit account is the oldest, consider keeping it open. This will give you a longer credit history, which could help build your credit score over time.
Stay beneath your credit limit
The amount owed on credit cards also has a big impact on your credit score. In the FICO scoring model, it accounts for 30% of your credit score. Lenders usually like to see that you utilize less than 30% of available credit.
Pay off debt
Also important in our list of credit-building tips is paying off debt. Since 30% of your FICO score is the amount owed, even moderate progress in paying off credit cards or other revolving debt may lead to a significant boost in credit score.
Two kinds of credit are commonly used in your credit score. There is revolving credit, which includes credit cards, store lines of credit, and similar types of loans; and installment credit, like mortgages and car loans.
Limit new credit cards
Opening a new credit card can be a good strategy to increase your total available credit and credit mix. In the FICO scoring model, new credit accounts make up 10% of your total credit score. However, applying for too many new credit cards in a short time can have a negative impact on your credit score.
Dispute errors on your credit report
You are entitled to your credit report once a year. Check your credit report and dispute any errors. Correcting errors can help boost your credit score.
Become an authorized user
One move that might quickly increase your credit score, would be to ask a friend or family member with a high credit score to add you as an authorized user to one of their credit cards. You don’t even have to use their card.
Just by being added as an authorized user, your score could be boosted based on the age of their credit and their regular payment history. For maximum impact, choose a card that reports to all three of the main credit bureaus.
Add a credit account
Approximately 10% of the FICO scoring model includes a credit mix. This refers to the type of credit you have — from credit cards to student loans and auto loans to mortgages. If you only have one type of credit, adding an extra type could help boost your credit score. One easy way to do this is with MoneyLion Credit Builder Plus. loan. It can help you build credit while you save — with no hard credit check.1 And don’t take our word for it — more than half of people who use it raise their score by 42+ points within 60 days!2
If you’re approved for the Credit Builder Plus membership, you will unlock all of this for $19.99/month:
Access to competitive-rate installment loans up to $1,000 that can help you build credit through positive payment history
Monthly credit reporting to all three credit bureaus
Credit monitoring and weekly updates on your credit score and credit factors
Personalized credit building insights
Get credit for rent and utilities payments
Rent payment services and bill payment reporting through ExperianBoost3 offer eligible renters monthly credit reporting opportunities. Depending on your current credit score and credit history, this might have a limited effect. But if you are new to credit or have no credit history, in addition to Credit Builder Plus, Experian Boost or Rent Track may help to build credit history quickly.
Consistency is always the best credit-building tip
Consistently using all these credit building tips could help you grow your credit score and credit history in 2022. Remember that no matter what your credit score is now, a MoneyLion Credit Builder Plus loan could help you start off in the right direction.
If you can, become an authorized user on someone’s account. Once you have your own credit card, pay it off on time, reduce overall debt, and check your credit report regularly to catch any errors.
In addition to credit building tips, focus on improving your overall financial health with a RoarMoneysm account. Manage your money to save more and be ready for big financial goals in 2022 and beyond.
FAQ
What builds credit the fastest?
Opening a credit card and paying it off every month can be one of the fastest ways to build credit.
What boosts credit score the most?
Your payment history accounts for 35% of your credit score, which is more than any other factor. Paying down credit card debt and paying all bills on time boosts your credit score the most. And remember to use all the credit building tips in this article!
What can you do to build a good credit score in the future?
Use MoneyLion tools to help you manage your finances. A Credit Builder Plus loan can really help you build your credit score. In addition, pay off credit card debt, make all payments on time, and keep at least the oldest line of credit open to increase the length of credit history.
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Disclosures
This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, MoneyLion does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information. For more information about MoneyLion, please visit https://www.moneylion.com/terms-and-conditions/.
MoneyLion is a financial technology company, not a bank. RoarMoney℠ demand deposit account is provided by, and MoneyLion Debit Mastercard® is issued by, Pathward®, National Association, Member, FDIC. RoarMoney is a service mark of MoneyLion. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Funds are FDIC insured, subject to applicable limitations and restrictions, when we receive the funds deposited to your account. MoneyLion is not itself a bank or a FDIC-insured institution and the FDIC's deposit insurance coverage only protects against the failure of a FDIC-insured institution. Pathward, National Association is a FDIC-insured depository institution.
This optional offer is not a Pathward® product or service. Credit Builder Plus membership ($19.99/mo) unlocks eligibility for Credit Builder Plus loans and other exclusive services. A soft credit pull will be conducted which has no impact to your credit score. Credit Builder Plus loans have an annual percentage rate (APR) ranging from 5.99% APR to 29.99% APR, are made by either exempt or state-licensed subsidiaries of MoneyLion Inc., and require a loan payment in addition to the membership payment. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account maintained by ML Wealth LLC and held by DriveWealth LLC, member SIPC and FINRA. The funds in this account will be placed into money market and/or cash sweep vehicles, and may generate interest at prevailing market rates. You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states.
Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.
When you apply for Credit Builder Plus, we will perform a soft credit pull to review certain financial information. This soft inquiry has no impact to your credit score and may or may not be recorded in your credit reports depending on the bureau. This is unlike a hard credit pull which affects your credit score and can appear on your credit report for two (2) years.
Credit score improvement is not guaranteed. A soft credit pull will be conducted that has no impact to your credit score. Credit scores are independently determined by credit bureaus. Data was sourced from credit score data from over 147,500 Credit Builder Plus members with an active loan between January 1, 2020, and March 15, 2023. Credit score improvement is not guaranteed. Credit scores are independently determined by credit bureaus. MoneyLion is not a Credit Services Organization. Credit Builder Plus is an optional service offered by MoneyLion.
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