4 Ways To Boost Your Credit By 2021

As so many have already said, 2020 has been an unprecedented year. For many people around the country, that has meant new financial challenges. 

If you lost your job or experienced some form of income disruption this year, you are well aware of these obstacles. Perhaps you were forced to max out your credit card to make ends meet or take out a high-interest personal loan for an unexpected expense. 

Through no fault of your own, your credit score may have taken a hit for one reason or another this year. If you are currently struggling financially, improving your score may be the last thing on your mind. But having good credit can help you considerably in 2021, especially if you may need to rent a new home, refinance your mortgage, or apply for another type of loan.

2020 may have been rough, but 2021 doesn’t have to be that way, too. The Motley Fool offers four tips to boost your credit score before the end of the year.

1. Lower Your Credit Utilization Ratio

Credit utilization is how much money you use against the total amount that you borrowed. This figure is a crucial factor used to calculate your overall credit score. Generally, lenders look for applicants with a credit utilization ratio under 30%. If you can reduce your rate, you’ll improve your score as well as your chances of approval.

An effective strategy to lower your credit utilization is to pay down your outstanding credit card balances. For instance, suppose you have multiple credit cards that give you a total line of credit of $10,000. If you owe $3,600 between them, paying at least $600 will considerably help your credit utilization ratio, and subsequently, your credit score.

2. Request A Higher Credit Limit

While paying off outstanding credit card balances is one way to lower your credit utilization ratio, not everybody has this ability right now, particularly during the holiday season. In that case, requesting a higher credit limit from your lender is another way to lower your credit utilization. 

If you have a history of paying at least the minimum on time each month, your creditor may approve your request. If you are approved, don’t fall into the temptation of spending more because it will increase your credit utilization, offsetting the whole reason for requesting a higher credit limit to begin with.

3. Get A New Credit Card (But Don’t Accrue A Balance)

If your credit card issuer doesn’t approve your request for a higher credit limit on the cards you already have, you could consider opening a new account. However, if you apply for a new credit card, don’t rack up a balance with it. As mentioned earlier, the purpose here is to lower your credit utilization ratio by raising your credit limit. Spending even more with a new card defeats the whole purpose.

Another thing to keep in mind is that applying for another credit card could slightly hurt your score. However, if your application is approved, your credit utilization ratio will improve dramatically and offset the damage done to your score. 

4. Make Sure Your Credit Report Is Error-Free

Have you ever reviewed your credit report? If you have, when was the last time you looked? Everyone makes mistakes, and the three major credit bureaus are no exception. There is always a chance your credit score may be in bad shape because of a clerical error. Perhaps your report shows you still owe a debt you repaid months ago, or another person’s debt was mistakenly added to your account.

Things like these are precisely why you should periodically check your credit report for mistakes. If you discover an error, it could be the reason why your rating is hurting. When you notice something wrong, report it, and resolve the problem as soon as possible. You would be surprised how fast your score will improve.

As part of the CARES Act, you can order a free credit report every week from AnnualCreditReport.com until April 2021. When you file a dispute, the credit agencies will get to work to remove the negative mark with little effort on your part. This way, you can begin 2021 with a better credit score and hopefully fewer financial troubles. 


  • Brackman, Maurie. “4 Steps to Improve Your Credit Before the End of the Year.” The Motley Fool, 16 Nov. 2020, www.fool.com/the-ascent/credit-cards/articles/4-steps-to-improve-your-credit-before-the-end-of-the-year/.
Ian Schindler