Inflation is a double-edged sword when it comes to personal finance. For one, it increases the cost of almost everything you need to buy, from groceries and restaurants to gas and consumer goods. But with the Federal Reserve raising interest rates to fight inflation, that also means the cost of credit is rising as well. If you have unpaid credit card debt, for example, the already high interest rate you’re paying has risen steadily in 2022 and could continue to do so through 2023. If you’re looking to take on new debt, like a car loan or a home loan, these rates also increase.
Find out: How much money should have hidden at home at all times
Important: This Credit Score Mistake Could Cost Americans Millions
The only way to combat this is to have a better credit score, which can get you a lower rate. But how can you quickly increase your credit score in times of inflation? Here are some steps you may be able to follow.
Pay off your debt
If you have unpaid credit card debt and the money available to pay off even some of it, it can improve your credit score. The most important factors in your credit score are your payment history and the amount of your debt. While paying on time gradually helps your score, reducing your debt offers the best value for money when it comes to increasing your score quickly. Reducing your debt can also give you leverage if you ask your credit card issuer to lower your interest rate.
Take our survey: Do you think student loan debt should be forgiven?
Ask for higher credit limits
An important part of your credit score is your use of credit. This is the percentage of your available credit lines that you are currently using. For example, if you have a credit limit of $10,000 and you have an outstanding debt of $5,000, your credit utilization is 50%. To reduce your credit score, you should try to reduce your credit utilization below 30%. Ten percent or less is even better in terms of improving your score.
Enjoy 0% Balance Transfer
Transferring a balance to another credit card usually won’t improve your credit score, but it could improve your cash flow. With most credit cards charging an interest rate of 15% or more – with some rates exceeding 20% – snagging a 0% balance transfer card could prevent your balances from growing quickly, allowing you to pay them off faster. This, in turn, is the best way to quickly boost your credit score. If nothing else, a 0% balance transfer card will lock in that rate, usually for 12 or even 18 months, allowing you to avoid any interest rate increases.
Check your credit report for errors
As difficult as it may seem, many credit reports contain errors. In some cases, the mistake can be enough to lower your credit score. For example, if you closed a credit card but your report still says it’s open and overdue, your score could be ruined through no fault of yours. It pays to check your credit report regularly, especially since you can access it for free online.
Spread your sales
If you’re unable to pay off any of your balances, see what you can do to at least split them between your cards. Although part of your credit score is your total credit usage, the amount you use of each individual card also plays a role. For example, if you have low overall credit usage but one of your cards is depleted, your score will suffer. But if you can move that balance to other cards and keep each card’s balance below 30%, it will help your score.
Become an authorized user
If you have relatives or friends with good credit history, you can piggyback on their records by asking them to add you as an authorized user to their account. Although you are not legally responsible for refunding charges to the account, the card’s credit history will appear on your report. This could instantly increase your score significantly. Of course, you will need to find someone willing to add you to their account, as they will be legally responsible for any charges you may add. You will also suffer the consequences of their bad habits if they suddenly stop paying their cards or go into significant debt. But if you have a good relationship with someone you trust and are willing to be responsible for their account, this could be a quick way to boost your score.
Get a credit bonus
If you are looking to boost your Experian credit score, you may consider signing up for Experian Credit Boost. This service allows you to add one-time payments to your credit report for services such as utilities, telecommunications, and even Netflix. Just as one-time payments on your credit accounts can boost your score, these service payments can too. But any increase in your score would only affect your Experian report, not your TransUnion or Equifax reports, as only Experian currently offers this service.
More from GOBankingRates
This article originally appeared on GOBankingRates.com: 7 Ways to Boost Your Credit Score During Inflation