Well 2017 flew by and we are already one week down in 2018, so it’s time to start putting together a resolution this year, this time something obtainable. Every year many people have these unrealistic expectations of losing 30 pounds by going to the gym “every day”, but after a couple months of going, the visits become less and less and pretty soon by summer you are no longer going but paying for your membership fees every month. This year how about we focus on our finances, specifically credit, so we can take advantage of the best interest rates on the market and pay as little interest as possible so that you can free up extra money and put your hard-earned dollars towards better use, such as funding as emergency account and saving for your future.
Check Your Credit Report
With some much fraud happening these days, you seem to hear about just about every day, in fact it happened to me twice in 2017, that it’s a good idea to check your credit report to review for accuracies and make sure all open accounts are up to date. Just keep in mind that it may take a month or two to catch up to the credit report. Each of the three major credit bureaus offer a free copy of your credit report once a year, although it won’t have your score. You can view your score on your monthly credit card statement.
Always Make On-Time Payments
One of the two major portions of your credit score is payment history. While being even a day late will not be reported to credit, you could be hit with a late fee or interest rate spike, but it’s once you hit thirty days late that your credit will be impacted and will take up to seven years to come off, whether it was a mistake or not. Payment history is so important that it’s a good idea to automate payments to pay on-time, if not earlier.
Pay Down Debt
The second major piece of your credit score is debt utilization, which is the overall balance compared to the credit line, so that the closer you reach your available credit the lower your score will go. A major focus to paying down debt should be priority this year so every dollar you can afford, even if it means trying a csl plasma card, all extra cash to pay down balances, not only for your score, but to pay off debt so that you no longer have to waste you money on interest payments any longer and can put your money to investing in yourself.
Keep Zero Balance Accounts Open
Paying off debt is a huge accomplishment, one that you should be proud of. Once you get a zero balance on a card you might look to closing the card so that you no longer can charge on it, but actually this could be a credit mistake. By closing the card, you are reducing your available credit, so if you have other balances, it could actually increase your credit utilization and decrease your credit score. If you are looking to avoid using the card, the best you can do is to cut up the card so you can’t use it, but still keep the account open.
A small portion of your credit score has to do with credit applications, and while it may only be a few points lower when you make a credit application, it’s all the more reason to only have your credit pulled for credit you really need and are going to use, such as a refinance, debt consolidation loan, or a better credit card with rewards. Every point in your credit score could matter when it comes to getting the best rates that are out there so you want to proceed with caution when it comes to thinking about applying for new credit.
Don’t Give Up
Fair warning, if you have had credit trouble in the past and are not making good credit moves, your score will not be fixed overnight. It takes years of discipline, not to mention patience, to get your score from average to excellent. If you continue on a path of good credit moves you will raise your score each month and will be there to redeem the best interest rates out there for your hard work. You can monitor your credit score on a month to month basis on your credit card statement to make sure your score is trending in the right direction.