2023 Resolution: Improve Your Credit

Pay Bills on Time
You probably already know late payments can hurt your credit score. And while carrying a credit card balance comes with its own financial risks, it’s important to know that most credit card accounts will only report a late payment to a credit bureau if you fail to make the minimum payment more than 30 days from the due date. So, if you’re able to pay your bills in full every month, keep doing so. But if you’re in a jam and can’t pay the full amount by the due date, just make sure to pay as much as you can and, at the least, the minimum.

Keep Your Credit Utilization Low
When your credit utilization is low, lenders will see you as less of a risk and your credit score will remain a lot higher. Credit Utilization is the amount of credit line you have versus the amount used. The lower the number, the better! To raise your credit score, keep credit utilization below 30%, but it’s a good idea to aim for 10% or less whenever possible. It’s okay to put most purchases on a primary card to maximize rewards, but make sure you aren’t damaging your credit score in the process by approaching your limits.

Choose the Right Card For You
There are a lot of credit card options out there and choosing the right card for you is just as important as paying off your card on time! Maybe you are paying a yearly fee that you don’t need to or perhaps you’d rather have a card that pays for travel as opposed to a percentage of cashback. Before you open a new card, make sure you look into all the benefits it has to offer. You can even use multiple cards. For example, one card might give better cashback on gas and one card might offer better travel points.  It’s okay to use both as long as you are diligent about paying them off!

Use Your Credit Card for Points
One of the biggest benefits of a credit card is the cashback and points that you receive.  Aim to use your credit card as a debit card and only put on it what you can afford. If you only use your credit card on what you can afford and then pay it off in full each month this will not only help you earn the maximum amount of points, but also help raise your credit score and help lenders see you as low risk!

Stick to a Budget
If you are working to raise your credit score this year, have your New Years’ resolution be to actually stick to a budget! A reasonable budget is key to prevent overspending that can harm your credit score. A good starting point is to lay out a long-term budget that covers all monthly expenses along with a few contingencies for unplanned bills. It’s always important to have money in savings for emergencies like car breakdowns, house repairs, and medical expenses.

Also, avoid opening new credit accounts just to get rewards.  If you have a larger credit limit, you’re likely to overspend and carry a balance – wiping out your rewards with interest charges.

Watch Your Credit Score
When you are trying to raise your credit score, it’s also important to monitor where your credit is currently sitting. There are a lot of great apps like Mint and Experian that not only show you your current Credit and FICO score but also have great built-in budget tools to keep you on track.

Whether you are trying to raise your credit score, or gain the maximum amount of credit card benefits, focusing on budgeting and paying off your cards will help! This year, make it a resolution to say goodbye to credit card debt and hello to a better credit score!