Fed Data Shows Consumers Are Struggling to Get Access to Credit. Here's How to Improve Your Chances

Many consumers rely on credit, whether in the form of personal loans or actual credit cards, to cover their expenses and pay for costs that arise unexpectedly, like home or car repairs. But these days, you might struggle to get approved for a loan or credit card more so than you might have in the past.

U.S. consumers report that it's harder to access credit now than it was a year ago, according to recent data from the Federal Reserve Bank of New York. Not only that, but many households expect that it will get harder to obtain credit a year from now.

If you've been denied credit in the past or are worried about your prospects of getting approved for a credit card or loan, then boosting your credit score could be the answer. Here's how to make that happen.

1. Pay all of your bills on time

Your payment history carries more weight than any other factor when calculating your credit score. So if you make a point to pay every bill of yours on time, that aspect of your credit score is apt to improve. To pull this off, though, you'll need more than just calendar reminders. You might need to add some money to your savings account so you have cash reserves to pay your bills.

2. Pay down some credit card debt

If you make the minimum payment due on your credit cards every month, you'll be considered timely with your debt. But carrying large credit card balances could hurt your credit score even if you're on time with your payments. That's because another big factor that goes into calculating your credit score is utilization, or the amount of available credit you're using at once. Paying off some of your credit card debt could shrink your utilization ratio, thereby helping your score improve.

3. Check your credit report for errors

Your credit report is a snapshot of your borrowing history. It shows which loans or lines of credit you have outstanding, what your balances look like, and how timely you are with payments. It's possible, though, for your credit report to contain a mistake that works against you. For example, yours might list a debt as delinquent when it was actually settled or paid off. So if you see an error on your credit report, reach out to the bureau that provided it and attempt to get the issue resolved. Doing so could lead to a quick increase in your credit score.

It may be getting harder to borrow money these days, but that doesn't mean you're doomed to be denied credit when you need it. If you go in with a solid credit score, there's a good chance you will get to borrow money. You just might face a higher interest rate than you'd like because borrowing costs are up right now on a whole. And if you make an effort to improve your credit score, you might find that your next loan or credit card application is met with a welcoming "yes."