We hear so much talk about trying to make fitness a priority to start the new year, some even have the sense to work on finances and reducing spending, but you don’t hear many talk about improving their credit score as the frontrunner of what to work on this year, but that doesn’t mean that you should continue to ignore the score that can get you the best or the worst interest rates on the market, a difference in what could be hundreds of dollars every month.  If you are looking to free up money and put your hard-earned dollars to more important areas such as building up an emergency fund or putting money away for retirement, then improving your credit should become a priority this year.

Review Your Full Credit Report

You can assume all you want about your credit, but until you fill out an application and not get the interest rate you’re looking for, the limit you need, or flat out turned down is where you really open your eyes.  In order to avoid the embarrassment and keep dollars in your wallet, you should review your full credit report to sure all accounts are up to date an accurate.  Just keep in mind that reports may be a couple months behind to catch up, and will not include your credit score, but you can see on your monthly credit card statement and watch your score trend up.

Make Regular On-Time Payments

There are two major pieces to your credit score, and making on-time payments are one of them.  Sure, you can miss up to thirty days until they are reported to your credit report, but even missing a day could cost you a late fee or a hefty interest rate increase which will cost you every month.  Late payments will show up on your report for up to seven years, whether you meant to or not, so it’s important to set up payments to be made on-time, if not earlier.

Pay Down Debt Balances

Instead of pondering whether or not is lyft cheaper than uber and spending your money going out a few times a week, maybe knock off a day or two at least and put your money towards getting out of debt.  Your credit utilization is as important as payment history, so the closer you are towards your credit limit not only on one credit card, but overall, the lower your score will be.  If you can pay off debt you can get back money spent towards interest and finally working on getting ahead and investing in yourself to build a nest egg for your future.

Leave $0 Balance Accounts Open

When you do finally get out of debt, it is definitely a reason to celebrate, but don’t celebrate your new found financial freedom by cancelling your card so that you don’t use and go down that debt path any longer.  By closing the account, you can actually be hurting your credit score by reducing that available credit from your overall limit.  If you are looking to resist temptation on using the card you can cut up the card and throw away, but still keep the account open to count towards your overall credit utilization and keep your credit score rising.

Limit Credit Applications

While having a lender pull your credit may only drop your score a few points, just think of how much lower that could send your score if you are filling out applications, whether you are using them or not.  Unless it is for a better credit card with rewards, a debt consolidation loan, or a mortgage, those are worth filling out an application for new credit, but try and do as much groundwork before you have your credit pulled to make sure you are going to go through.  By reviewing your report beforehand, you can eliminate any surprises when you do go to applying.

Stick with It

I will tell you that whether you have had credit problems in the past or are just looking on increasing your score, you will not see drastic improvement overnight, but will consistent hard work over a long period of time you can finally get us of average credit to having excellent and being able to take advantage of the best interest rates on the market and saving you money every month.  If you stick with it and monitor your score on your credit card statement you can see your score continue to rise every month and give motivation to continue on this financial path.