2 Reasons a Strong Credit Score Is More Important Than Ever Right Now

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It’s something you should really focus on.

Key points

• A strong credit score could be your ticket to more affordable borrowing options.
• There are steps you can take to raise your score if it could use a lift.
• Paying your bills on time and paying down some existing debt could really help your score improve.

Your credit score is a number you may not think about on a daily basis. But it’s a really important number nonetheless.

Your credit score measures how trustworthy you are as a borrower. And if yours isn’t in the best shape, it’s important to do what you can to bring it up right now. Here’s why.

1. Interest rates are higher on a whole — and they could keep rising

In the wake of interest rate hikes on the part of the Federal Reserve, borrowing rates across pretty much all loan products are up. That means you might pay more interest on a personal loan, auto loan, or credit card. You don’t want to make that situation even worse by being a borrower with poor credit.

See, lenders tend to reward borrowers with strong credit with lower borrowing rates. But if your credit is poor, you might get stuck with an unfavorable interest rate on your next loan.

Meanwhile, the Fed isn’t done raising interest rates. So as costly as borrowing is right now, things could get worse in the coming months.

2. You may need more borrowing options if a recession hits

Many financial experts are warning that a recession could hit in 2023, and that it may be a lengthy one. And job loss tends to go hand in hand with economic decline.

The stronger your credit score, the more likely you’ll be to qualify for a loan should you need money to replace a missing paycheck. If you don’t make the effort to boost your credit score, you could end up in a situation where you really need money but aren’t able to get a lender to work with you.

How to boost your credit score

Although having great credit is an important thing at any time, it’s especially crucial right now. But the good news is that there are steps you can take to give your credit score a boost.

First, pay all bills on time. That includes your credit cards — be sure to cover your minimum payments at the very least, because as long as you make those, your payments will be counted as timely.

Next, if it’s possible, try to pay off some existing credit card debt. The amount of available credit you’re using at once plays a role in calculating your credit score, so if you’re able to whittle down a credit card balance, your score could improve.

Finally, check your credit report for errors and correct mistakes that reflect poorly on you as a borrower. If you have a delinquent debt listed on your credit report but it’s a debt that was never yours in the first place, that’s the sort of mistake you’ll want to dispute and have removed.

A strong credit score could make borrowing a little less expensive at a time when interest rates are so high. It could also make you more likely to qualify for a loan should that need arise. So do what you can to raise your credit score if you’re not happy with what it looks like right now. Chances are, you’ll be thankful you did.