Improving your credit score can offer big benefits, such as better interest rates and access to credit for big-ticket items such as homes, cars or even financing to start a small business.
There are steps you can take to boost your credit rating, and with the New Year upon us, why not start now?
The first step in the journey to better credit is to know exactly what you are dealing with. That means getting a copy of your credit report. Under the law, consumers are entitled to one free credit report each year, from each of the three credit reporting agencies. You can request your free reports at AnnualCreditReport.com. There are also websites that will provide credit reports for a fee.
It’s important to keep track of your credit report to find blemishes to cure, such as disputed charges or old, unpaid bills, no matter how small. Consumers should also protect themselves against fraudulent charges by regularly monitoring their credit reports and giving extra scrutiny to their credit card statements.
Next, begin to attack your credit card debt by paying it down. A good rule of thumb is to make sure you’re using less than 30 percent of your available credit, and ideally, the number should be at or below 10 percent, according to Creditnet.com.
It may be a daunting task to pay down the balances on your cards, especially when credit card companies tack on high interest charges every month, taking a bite out of whatever payment you make. One way around this is to transfer your balance to a new card that offers an introductory deal of no interest for six to 18 months. If you choose this option, make sure to calculate - and make - the correct monthly payment that will allow you to retire the debt within the interest-free period. Check the rates charged after the interest-free period, too. You may be able to find a better rate or even try to negotiate a lower rate over the phone when you sign up.
MSN Money has prepared a list of 13 tips to improve your credit in 2013. The tips include applying only for credit you need, instead of any credit that is offered to you; using credit wisely by keeping your accounts active, but never borrowing more than you can easily pay back; working with collectors to clear up any collection items; and setting aside a few minutes each day to learn about credit and debt, because this knowledge will pay dividends for the rest of your life.
The website advises marking your calendar with bimonthly or monthly reminders of your financial resolutions. Do you have short-term goals in reducing credit card debt? Did you hit that first goal? Congratulate yourself and move on to the next goal!
Lastly, be more thoughtful about all purchases, particularly impulse purchases, and resolve to use your cards less in 2013, which will also help keep your balances down.
Here’s to a prosperous, healthy New Year, and higher credit scores!
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