Chances are, your new year’s resolutions this year will have something to do with money. Whether the goal is to save more, budget better, or pay off debt, most of us put better financial habits towards the top of our yearly to-do list. But what about your credit? Although it might not feel as urgent as some of your other goals, good credit can be the bedrock of a healthy financial profile. To help you achieve that, here are five new year’s resolutions for your credit you might want to consider.
5 New Year’s Resolutions for Your Credit You Might Want to Make
1. Read Your Credit Reports
Not all new year’s resolutions are hard to maintain, and this might be the easiest one of all. If you do nothing else in the new year for your credit, read your credit reports.
All you have to do is go to AnnualCreditReport.com and request one credit report from each of the three credit reporting agencies (CRAs): Equifax, Experian, and TransUnion. Then read your credit reports to check for accuracy, most especially making sure each account listed is, in fact, one that you opened. Keep in mind that your credit reports can and probably will differ from each other, as lenders and other financial institutions aren’t required to report your data to all three CRAs. The goal isn’t to ensure that your reports are identical, but to ensure that the information listed on all of the reports is accurate.
You have a right to view your credit reports for free once a year, and they serve as a great way to understand what your credit profile looks like to potential lenders. What’s more, this is one of the first lines of defense in catching identity theft. Don’t skip this easy step to ensuring the safety of your credit.
2. Dispute Errors on Your Credit Reports
When you’re reviewing your credit report, you might find some items that don’t add up. Perhaps there’s a misspelling in your name, a transposed security number, or details about an account that are incorrect. If that happens, then you should immediately dispute the error with the CRA showing it.
Credit report mistakes can happen to anyone, and if they happen to you, your credit scores (which are based on the information on your credit reports) can suffer needlessly. Finding and disputing these mistakes is an easy way to make sure your credit is in good shape for the new year.
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3. Focus on Credit and Identity Security
As technology becomes more advanced, so too do thieves, who often use technology to obtain consumer information for their gain. The new year is a good time to put measures in place to protect your identity and work to maintain the security of your financial accounts.
Start with things such as setting strong passwords for the websites you log into. Then review your credit reports regularly to ensure that no accounts are being opened in your name, and your credit card statements to ensure that fraudulent charges aren’t being made. Staying on top of your credit activity can help you catch any nefarious activity early.
You can also look into things like a credit freeze if you have reason to believe that your identity has been compromised, or follow these steps if your credit card was lost or stolen.
4. Swiftly Handle Collections Accounts
If you have accounts in collections, then a great new year’s resolution for your credit would be to make a plan to deal with them once and for all. Collections accounts don’t paint a positive light on your credit profile, but paying them off shows a good faith effort in moving forward towards positive credit behavior.
You don’t have to wait for a debt collector to call you. You can be proactive in resolving your delinquent accounts. You might find that debt collectors are willing to create a payment plan for you, or even settle for less if you have a sum of money you can pay right away (a tax refund can help in this case). The goal is to get those collections accounts behind you.
Keep in mind, however, that there is a statute of limitations on most debts, after which a debt becomes “time-barred.” What this means is that after a certain number of years (which vary per state and type of debt), you may have a defense against a collection lawsuit by a debt collector seeking repayment of that debt. That said, the statute of limitations may reset in certain instances, such as making a payment or promising to make a payment. The law varies by state. If you think one of your debts is time-barred, or that you don’t owe the debt for some other reason, you should consider speaking with an attorney.
5. Don’t Sweat Over Getting the “Perfect” Credit Score
If you’re someone who likes to score highly on tests, you might find yourself aiming for a “perfect” credit score. In that case, a good new year’s resolution for your credit might be to put aside that goal. Everyone with credit has so many credit scores that it doesn’t make sense to focus too much on getting one or any of them to that perfect status.
Instead, what you might want to do is take a look at the range your credit score falls into. There’s a decent chance that the majority of your credit scores will be in the same range, and that tells you what you need to know about how potential lenders will see you as a borrower. The higher your credit score range, the more likely you’ll be approved for new credit (and the lower your interest rates might be).
By establishing and following good credit habits, you can ensure that you’re going to end up in the highest range possible for you. There’s simply no need to focus on getting the highest credit score there is.
Take control of your finances. Here’s what you need to know about credit scores and credit reports.