A new year means that it’s time for a fresh start. Make your credit health a priority next year by assessing your credit and determining where you can make improvements. Set an attainable goal for yourself with clear steps that you will take to achieve it. This resolution will be easier to stick to than your new workout schedule at the gym.
Resolve to Make Payments On Time
By now, you likely know that late payments are harmful to your credit score. Your credit report details your payment history, which is visible to lenders when you apply for new lines of credit. If you miss a loan payment, the account could default immediately, doing even more damage to your credit. This year, strive to make all payments in full and on time.
Set up automatic payments on any accounts that you can. Payments will be automatically withdrawn from your account, meaning you never run the risk of a forgotten bill. Take the time to set reminders so that all bills and due dates are accounted for.
If you know that you won’t be able to make a loan payment on time, contact the lender before you default. The lender may allow you to defer payments until your financial situation improves. A deferment still appears on your credit report, but a deferment doesn’t reflect as negatively as a default.
By the end of the year, your credit report will reflect that you’re a responsible borrower who consistently pays on time.
Resolve to Reduce Debt
Your credit score also reflects the amount of debt you have and your credit utilization. Significant amounts of debt and a high debt to income ratio are harmful to your credit. This year, determine a set amount that you can put toward debt payoff each month. It may not be realistic to be debt free by the end of the year, but you can still strive to reduce debt by small, manageable increments over time. As the year progresses, keep a close eye on your credit utilization as well.
Resolve to Monitor Your Credit Health All Year
You can get a free credit report from each of the three credit bureaus (Experian, Equifax, and TransUnion) every twelve months. Check your report regularly to ensure that all information is accurate and up to date. Be sure to dispute credit report inaccuracies directly with the credit bureaus.
Review the current accounts listed and consider closing those with high interest. Keep older, well-maintained accounts open; these have a positive impact on your credit.
Accomplish Your Goal
Good credit doesn’t happen overnight, but by the end of year, you’ll see a higher credit score and an improved credit report. Set realistic goals and you’ll be well on your way to healthier credit in the new year.