New Year’s Resolution: Repair Your Credit!

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Welcome to 2015! While we’re already a few weeks into the year (and already past the time that most people give up their New Year’s resolutions), that doesn’t mean it’s too late to pick some new resolutions for the year and really make a plan to stick with them. Repairing your credit is a great goal to make in the new year, and because there are lots of little things you can do to improve your credit and the improvements are easily measurable, this is a goal that you’re likely to stick with. Aren’t sure where to start? Aren’t sure what steps you need to take? Don’t worry, we’ve got some tips to making this goal stick and really improving your credit in the New Year.

  1. Make a plan. This is vital to actually achieving this goal. If you don’t have a firm goal in mind, something that you really want to achieve and a concrete plan for achieving it, you might as well not even have a goal. Just saying that you want to improve or repair your credit is not enough. You need a concrete goal, whether it’s a specific (and reasonable) number you want your credit score to reach or just the amount of debt your want to have paid down by the end of the year, make it tangible and measurable and write down how you’re going to do it.
  1. Write down big expenditures for the next year. Do you help you kids pay their college tuition? Do you need to purchase a new car? Are you paying for a wedding? All of these are important items to take into account when working on your credit, as many of these will require you to draw on your credit. Of course, Frank’s is a viable option for those looking to purchase a vehicle with bad credit! 😉
  1. Make a budget. A real budget—not just one that you try to stick to, a strict one. Sure, you can budget yourself some cushion or some extra cash for extra expenditures, but only if you have funds for all of the necessary things first. When trying to repair your credit, your budget should be aggressive. Cut down on the spending that you really don’t need and devote money to the bills that really need your attention. Make sure that you have some to put into savings and enough to pay down your debts.
  1. Set up a system to make sure you pay bills on time. Being late on your bills is a major credit killer. Don’t let it happen. There are a lot of banks and lenders that will let you set up a direct deposit system that will take the money out of your account when the bill is due. Paying on time consistently is one of the best ways to improve damaged credit, especially if that damage was caused by paying late in the first place.
  1. Make a plan to pay down your debt. Just making regular payments on your credit card or student loans isn’t enough. While having some debt may be good for your credit, a huge pile of debt looming over you is never a good idea. Make 2015 the year of cutting back on debt. Try not to take out any new loans unless they are absolutely necessary. Instead of just paying the minimum payment, devote your extra cash to those debts. Start by paying off the smallest debt first. Once that money is freed up, use it start paying down your other debts, from the smallest to the biggest. As you pay them off, more and more money will be freed up in your monthly budget, making it easier and easier to pay down other debts.
  1. Cut expenses. Are you paying for satellite television but you actually watch most of your favorite shows online? Do you have a home phone and a cellphone? Are you renting a house that’s far too big for your needs? If there is any fat to trim on your budget, now is the time to trim it—even if it means going without for a few years. With the availability of entertainment on the internet these days, it may be overkill to pay for both internet and television while you’re trying to repair your credit and get out from under debt. Even just packing a lunch instead of buying one out can save you hundreds every year.
  1. Check your scores. Don’t know what your credit score is? Haven’t taken a look at your credit report lately (or ever)? There are websites that will allow you to look at your credit score for free, and there are websites that will provide you with a credit report at very minimal costs. While you’re working to improve your credit, it’s good to check it regularly.
  1. Check your report for errors. Sometimes, there may be an error on your report that is actually causing you to have a lower score than you should have. Once you have your report in hand, check it thoroughly—and we mean thoroughly. A mistake or error on your report can have serious impact, and having these fixed is one of the easiest ways to improve your score.
  1. Refinance your mortgage. If your have the possibility of refinancing your mortgage to a lower interest rate, this is a good way to free up a little extra cash each month, which you can put towards your other debts. If you haven’t looked into refinancing recently, now might be a good time to see if you can get a better interest rate.
  1. Use credit only if you know you can pay it off immediately. While you should not just stop using your credit if you are trying to repair it, you should only use it if you know you can pay it off immediately, on top of paying down your other credit card debt or loans. Use credit for big purchases only if those purchases are absolutely necessary.