4 Things That Might Affect Your Credit Score in 2024

Whether you are looking to apply for a new car loan, credit card, mortgage, or build your credit profile, it makes sense to be aware of the factors that influence your credit score. Credit weighs heavily on most people’s minds, and as we have just entered 2024, it’s wise to consider improving your credit. Almost four out of five Americans are struggling to improve their credit, and if you’re one of them, here are a few key things to watch out for.

Holiday Debt

We all need to take that break and deserve to treat ourselves, but holiday spending can haunt you for months. Over 50% of Americans ended up incurring credit card debt when shopping during the last holiday season, and many have yet to pay off their balances.

One key factor that influences credit scores is payment history. Even if you carry debt, ensure that you make at least the minimum payments on your card every month. This way, you can maintain your payment history intact and protect your credit score. If you can, pay more, as it’s better for your credit utilization.

Ideally, experts recommend keeping your credit balance under 30% of your credit limit to get a good score. Your credit usage is low when you pay your balances in total, and you’re exempt from interest charges.

Credit Card Delinquencies

A recent Federal Reserve Bank of New York report concluded that debt balances grew by $228 billion in the third quarter of 2023. The report also found that credit card delinquencies have increased significantly, especially among the younger generation. This trend is expected to continue in 2024, and we can expect more people to struggle with their available credit and repayment of debts.

If you notice that your credit card account has become delinquent (a month or more past the due date), pay the bill immediately! If you delay payments, you’ll only incur more damage, and these negative marks can make it difficult to open new lines of credit.

Student Loans

Most students struggle with repaying their student loans. Federal student loans accrued interest again in September 2023, and the payments continued the following month. Payments made after a pause of 3.5 years put pressure on the borrowers’ finances.

Paying student loans is not easy, and the Education Department set up a one-year “on-ramp” period to assist those struggling with student loan bills. In this period, missed payments will not be considered delinquent, be reported to credit bureaus or debt collection agencies, or go into default.

Nevertheless, missed payments are still risky because they keep adding to the interest and rising balance. It can become too much to handle when you end up with a considerable balance following the grace period. If you’re looking to repay your student loans, work actively to find solutions to make your student debt more affordable within your budget.

Applying For New Credit

If you’re considering applying for a credit card or a loan in 2024, this is for you. Opening an account increases your credit limit and adds to your mix of credit types, which helps your credit score. But it can also affect your average credit age or make you want to spend more of your credit, leading to your score slipping.

You can still borrow, but only if necessary, and make sure to compare interest rates and annual fees before picking a lender. If you’re carrying debt, look for a balance transfer card with a 0% annual percentage rate for the introductory period. Also, ensure that you check your credit score and reports before you apply so you can address any incorrect information, if present, beforehand.

Bottom Line

A credit score may seem like just a number on some reports, but it’s a crucial aspect in determining your financial life. If you utilize the tips mentioned above to maintain good credit, you can keep that momentum going and watch as your score climbs. Establishing your creditworthiness and healthy financial habits will help raise your credit score.

So, make your payments on time and keep your credit card balances low. As your score improves, credit card companies will trust you to repay money and even increase your credit limits, improving your scores even more. It won’t happen overnight, but if you remain focused and make the effort, you can make the 2024 one in which your credit score truly shines!