It’s the perfect time to retrospect and reevaluate the life choices made and start afresh to make this New Year the best year yet. But the thing with New Year resolutions is that they’re usually very hard to keep as most of the time, we lose our determination in a few weeks, especially in case of financial resolutions, and find ourselves right back to square one trying to figure out where it all went wrong. In fact, improving finances and debt payments are actually some of the top New Year’s resolutions among other ones like reducing weight or joining the gym. Here are a few resolutions to improve your credit health in the new year.
Make payments on time, every time
The first step to improve your credit score is to schedule your debt payments. Carrying high debts or delaying your payments bring down your credit score and the probability of
getting new credit cards and loans. Scheduling all bill payments for the year on a calendar is one of the easiest ways to alert yourself against delayed payments. Remember, the sooner you pay off your debts, the better your credit score gets. Paying off more than the minimum or pre-paying your debts will not only reduce your credit utilization ratio but will also increase your eligibility for the
best credit cards available. Concentrating on one credit balance at a time while making other payments simultaneously can help you clear your debts and improve your credit score at a faster rate.
Create a budget and stick to it
Budgets are financial tools that help you balance your expenditure and saving by keeping track of your expense with respect your income. Redesign expenses by allocating and setting limits on your monthly income so that you don’t cross your budget. Proper budgeting enables you to make timely payments and have more control over your expenditure. Sticking to the budget also gives you a sense of financial discipline and ensures a more balanced use of credit cards. This will help you lower your credit utilization for the year which in turn
improve your credit score.
Obtain your credit report and monitor it all year
Your credit report is the only place you will find your credit score. Credit bureaus are usually required to provide you with one free credit report annually. This will help you see the exact credit factors that are lowering your credit score. Prioritizing on keeping your credit utilization ratio (CUR) under 30% can go a long way in the new year, as CUR is one of the major factors that your credit score depends on.
Eliminate your credit card debt
When your balances are inspected, credit bureaus concentrate only on the debt-to-limit relation. A low credit balance with respect to your credit limit can always improve your chances of getting an
approval for home loan, car loan or a new credit card. Exhausting your limit will have a negative impact on your credit score. Hence, eliminating debts on the accounts with the lowest credit limit would greatly improve your score.
Work on high-interest credit accounts
Prioritize your credit accounts with respect to the interest rates on each of the balances as high-interest debts are the ones that increase the risk of adding more credit balances on your card. Paying an extra amount on the high-interest debts once you’ve paid off the remaining minimums on the other accounts will help you eliminate your credit balance at a faster rate. Once the debts on that account are cleared, you can continue rolling over the money onto the next credit account on your priority list. With each debt that you clear, your credit history also improves over time.
If you want to keep a good credit score, educate yourself. Unless you know what is going on with your credit accounts, how can you expect a good financial and credit health? The idea is to have a good credit performance. This can be achieved only by paying off or at least by bringing down your credit balances. Monitoring your credit accounts will help you achieve your resolution by the end the year. Set realistic goals, it will help you achieve a higher credit score and an improved credit health in 2018.
