33% of Americans Were Denied Credit in the Past Year. Here's How to Change That

Denied a loan or credit card? Here's your next move.

You never know when the need to borrow money might arise. If you don't have a fully loaded emergency fund, for example, you might need to take out a loan to cover an unplanned bill. Or, you might need a credit card to buy yourself some flexibility at times when your bills are up (such as right now, when inflation is soaring).

But borrowing money, whether in the form of a loan or a credit card balance, isn't a given. In fact, over the past year, a good 33% of working Americans have been denied credit, according to Salary Finance's fourth annual report. If that's happened to you, then it's probably because your credit score needs work. And here are a few steps you can take to boost it.

1. Check your credit report

Credit report errors are pretty common. And if you have one that works against you -- say, a delinquent debt you settled long ago -- then it could drag your credit score into unfavorable territory.

That's why it's a good idea to check your credit report a few times a year. You can actually obtain a free copy annually from each of the three reporting bureaus -- Experian, Equifax, and TransUnion.

2. Be timely with bills

Your payment history speaks to how timely you are with your bills, and of the various factors that go into calculating your credit score, it carries the most weight. Being late with even a single bill could cause your score to take a notable hit, so it's best to avoid that scenario when possible.

You can avoid being late in a number of ways. First, set calendar reminders for your various bills, or arrange to have them auto-paid if that's an option. Next, build an emergency fund so a lack of money doesn't prevent you from meeting your financial obligations.

Finally, if you think you're at risk of being late with a bill, reach out and ask for leeway. Say there's a month when you can't make your mortgage payment because you ran into some unplanned bills and don't have the money. Rather than just decide you'll make that payment when you can, contact your loan servicer and see what options you have. Making a partial payment could prevent a scenario where you're reported to a credit bureau as late.

3. Pay off some existing credit card debt

Your credit utilization ratio measures the amount of revolving credit you're using at once. And second to your payment history, it's the most important factor in calculating your credit score.

A good way to lower that ratio (which will help your score) is to pay off existing credit card balances. Now you may not be able to do that overnight, but you can work on freeing up cash to chip away at what you owe. At the same time, you may want to explore options like a balance transfer to see if it makes your debt less expensive to pay off.

The lower your credit score, the more likely you are to be denied credit when you need it. Use these tips to boost your score -- and open the door to more borrowing possibilities.