Credit score

Could a Side Hustle Help Boost Your Credit Score?

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The quick answer? Yes, but indirectly.


Key points

  • Income is not a direct factor when determining a credit score.
  • But earning more money could help you deal with your debt, improving your credit score.

If it seems like half the people you know have a side hustle these days, you’re not alone. Side hustles have become increasingly popular, with many people getting second jobs to boost their savings or better manage their cost of living in the face of inflation.

If you get a side gig, it could help you achieve different financial goals, like buying a house or building up an emergency fund, or just giving you more flexibility with everyday bills. But here’s another benefit you could reap: a higher credit score.

How a Side Hustle Can Improve Your Credit Score

Getting a side hustle will not directly increase your credit score. This is because income is not a factor in calculating this number.

Instead, here’s what goes into your credit score:

  • Your payment history, which shows how quickly you process your bills
  • Your credit utilization rate, which shows how much of your revolving credit you are using at one time
  • The length of your credit history, which shows how long you’ve had open credit accounts
  • Your credit mix, which indicates the type of loan you are taking out
  • New credit accounts, which show how many loans or credit cards you’ve recently applied for

As you can see, the amount of money you win does not directly play into any of these categories. But it could have an indirect impact.

The more money you earn, the less likely you are to fall behind on your bills. In this regard, getting a side hustle could make you less likely to be late with payments.

Also, if you make more money, you might not have to carry such a high credit card balance. Increasing your income with a side hustle could also help you reduce an existing credit card balance, helping to improve your credit utilization rate.

Finally, an increase in income might mean that you don’t have to apply for as many loans or credit cards in the first place. And fewer recent credit accounts means fewer serious inquiries on your credit report, which can lower your score (but not to such an extreme degree, as one serious inquiry will generally only result in a five to 10 point drop ).

Should you get a side hustle?

If your goal is to boost your credit score, a side hustle could make that possible, while potentially helping to take away some of the financial stress you may be experiencing. If you manage on the side and use that money to pay your bills on time and reduce existing credit card debt, it could have a significant impact on your credit score, making loans more affordable when you need to borrow.

The gig economy is full of opportunities to find work in addition to your main job, so it pays to explore your options. Even if you only have a few hours a week to devote to a side hustle, it could still help shape your finances — and your credit score — for the better.

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