We all have good intentions to make changes and improve our lives in many ways when the new year begins. One of the best resolutions you can make is to get your finances in order. Making a plan to clean up your credit at the beginning of the year has its benefits and can result in a much more stable and happier year overall. These are some of the best New Year’s resolutions to clean up credit that you can make.
Make Payments on Time
One of the most damaging habits for your credit rating is consistently making payments late. Start the new year out with a plan to make all your payments on time. This resolution may require setting up automatic payments to ensure they are paid each month or adding alerts to your personal calendar. Just be sure to set payment reminders early to allow time for the payment to clear. You can save a great deal of money in late fees and increased interest if you resolve to make your payments on time this year.
Pay More than the Minimum Monthly Payment
It’s easy to fall into the trap of only making just the minimum monthly payment on your debt, especially when money is tight. Of course, there’s nothing wrong with only paying the minimum if it’s all you can afford at the moment. The problem, however, is that paying only the minimum payment due results in only paying interest and never really making any progress on the principal. Making just the minimum monthly payment often means you’ll be in debt longer, which isn’t always attractive on your credit report. Plan to make more than the minimum monthly payment this year, even if it’s just a couple more dollars each month, and you’ll get your debt paid down much faster.
Set Up Payment Arrangements
If you have old debt or medical bills you haven’t been able to pay, now is a good time to make the phone call and set up a payment arrangement. Many creditors will help you set up a payment arrangement that is affordable according to your situation, and you can begin to pay down what you owe. It’s easy to get caught up in how overwhelming the full balance is rather than focusing on the effect even a small payment might make.
Check and Monitor Credit Reports
Last year the Federal Trade Commission (FTC) reported that one in five consumers has at least one error on their credit reports. Errors and misreported accounts and payments can have a negative impact on your credit rating. So, it’s a good idea to get into the habit of checking your credit reports regularly. According to the Fair Credit Reporting Act (FCRA) you are entitled to one free report from each of the credit bureaus – TransUnion, Experian, and Equifax, every year. Make one of your New Year’s resolutions to check your credit report each year, and address any errors or concerns, many of which can be handled online.
What are your New Year’s resolutions to clean up your credit? Let us know in the comments.