New Year’s resolutions are a popular tradition in January, and one of the best changes you can make is to improve your credit. Your credit score affects many areas of your life, from your ability to buy a car or rent a home to the interest rates you pay on loans.
Fortunately, there are things you can do to improve your credit score. Here are three steps to take to start improving your credit today!
Know What Impacts Your Credit Score
Having a good credit score is essential for enjoying financial freedom and stability in life. But before researching credit-building strategies and creating plans for improvement, it’s important to understand how your credit score is calculated.
The five factors that are considered when creating a credit score are payment history, the amount of available credit in use, the length of one’s established credit history, the types of credit you have open, and how much new credit you recently opened.
Keeping on top of these factors can help build an excellent credit file over time — so understanding them is the first step to improving your score in a positive direction.
Free Up Money in Your Budget
If you’re in a bind with your credit score due to falling behind on payments, don’t despair.
One basic step toward improving your financial situation is to find ways to free up funds in your budget so you can catch up. You can save money by locating better prices on the products and services you’re already using.
From cell phone plans and car insurance to cable and internet subscriptions, shop around for the best deals that meet your budget needs. For example, Freeway Car Insurance researches several options to help you find the best one for your needs and budget.
As you shop around, see if you can find additional services bundled in packages you already use. For instance, some cell phone plans include specific streaming services, allowing you to stop paying for that streaming service separately.
Once you’ve freed up some money, you can create a plan to get your payments back on track.
Check Your Credit Report
Stay on top of the information listed in your credit report. This is an excellent way to improve your score and make sure it accurately reflects your financial history.
Unfortunately, credit reporting errors can impact your score in a significant way if you don’t address them. Take a few minutes each year to review your personal credit report and rectify any inaccuracies that may be there.
Take action right away; prompt corrections are usually rewarded with an improved rating soon after. Making sure your credit report is accurate is a key step to having good credit.
Have Patience as Your Score Improves
If you follow the tips above, you’re likely see your credit score improve this year. Just remember to be patient — it takes time for your credit to improve, but it’s well worth it in the end!
Wishing you a great financial year ahead!
