Prep for the next Fed rate increase by boosting your credit score with these tools

The Federal Reserve raised interest rates by a quarter of a percentage point this month and officials signaled that another hike is possible later this year; now is the time to work on your credit.

Your credit score — a three-digit number between 300 and 850 — is a key player in determining how much it will cost you to borrow money. Typically, the higher your score, the lower your rate.

This is true no matter what the federal funds rate is, or the rate at which banks borrow and lend to each other overnight. While consumers don’t pay that rate directly, it trickles down to the Annual Percentage Rates (APR) you’ll see when borrowing money, from credit card accounts to auto loans and mortgages.

As the Federal Reserve raises the federal funds rate, obtaining credit gets more expensive for all consumers. Therefore, raising your credit score is one of the best moves you can make to get the lowest rates possible.

Data from a LendingTree study published in September found that the difference between the total interest paid by fair credit borrowers (those with a score between 580 and 669) and very good credit borrowers (those with a score from 740 to 799) was $42,950. This amount is the total ofcredit card, personal loan, auto loan and mortgage debt paid over their full terms.

Additionally, even those who increased their score from good (670 to 739) to very good (740 to 799) stand to benefit: The study expected this group to save $20,530 over the life of the four loan types combined.

While raising your credit score is a smart move anytime, it can be even more beneficial when interest rates rise. Below, CNBC Select rounds up tips to increase your credit score and the tools to help you.

If you’re not tracking which payments are due when, you could be hurting your credit score. Missing a payment by 30 days can drop your score by around 100 points, according to Chase. While putting your bills on autopay might sound nice, it’s not always an option for people who don’t have much room in their budget.

Some apps can help you plan for expected expenses and budget your funds so that everything gets paid in full and on time.

PocketGuard offers a payment tracking service that can help you stay on top of your bills and create a budget. It also has a free tier that lets you try the app with no commitment.

Quicken Simplifi can also help you see a snapshot of your spending and bills, and help you manage the money you have leftover after your expenses are paid.

Not every bill you pay is automatically reported to the credit bureaus that manage credit scores. Things like rent, utilities and even internet bills can help to boost your score if paid on time consistently. To get those expenses on your report, you’ll need a service like *Experian Boost.

Experian Boost is free to use and users have reported seeing their average FICO^® Score, which is one type of credit score, increase 13 points, according to the company.

Revolving account balances, or accounts where you can borrow and pay off debt up to a certain limit like credit cards, can have a big impact on your credit utilization rate — the amount of revolving credit you’re using divided by your total available revolving credit. Having a lower credit utilization rate can help raise your credit score. Paying off the balances on your revolving accounts can lower that ratio.

Using a 0% APR credit card could help you pay down balances for a period of time without interest. We like the Wells Fargo Reflect® Card, which offers 21 months from account opening of a 0% introductory APR on purchases and qualifying balance transfers (and a 17.49%, 23.99% or 28.24% variable APR afterward; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5).

The Chase Freedom Unlimited® (seerates and fees)is another strong option. This card has a 0% intro APR for 15 months from account opening on purchases and balance transfers (18.24% to 27.74% variable APR afterward).

If you haven’t browsed a copy of your credit report, now is the time. After all, a 2024 study by Consumer Reports and WorkMoney found that 44% of Americans found at least one error on their reports, with 34% finding serious issues. Those types of errors can lower your score, and make borrowing more expensive.

To get a copy of your credit report, visit annualcreditreport.com, the website established by federal law to distribute credit reports from all three credit bureaus. Some credit cards also have this perk, but this tool available to anyone.

You can also sign up for a credit monitoring service, like Experian IdentityWorks, which tracks your score and sends you regular updates. It can also help you scan the dark web for leaked personal information.

If you find inaccurate data, you’ll need to dispute it directly with the credit bureau reporting the issue. The Consumer Financial Protection Bureau’s templates can help you fill in the blanks and mail them to the appropriate company.

You may have to pay for these services , though prices tend to be lower than those charged by debt relief or settlement companies, which can be as high as 25%. These services also encourage borrowers to stop paying their debts and save the funds, so they can make an offer to settle the debt for less. This can cause credit scores to dip and may expose borrowers to lawsuits by creditors.

Money Management International is a credit counseling service that offers transparent pricing and works in all 50 U.S. states, and has 30 branches for in-person assistance.

Additionally, Apprisen is known for its affordable credit counseling rates and fees that will never exceed $45 each. It also offers hardship waivers for its debt management plans, making them even more accessible.

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*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.