So many of us make New Year’s resolutions, and so few of us stick to them.
Each year, I seem to make the same resolutions: to get healthy, lose weight, eat better, exercise more, etc. It doesn’t take long before those lofty goals fade into the good night and I’m back in my spot of the couch with my iPad in one hand and bag of chips in the other. My family habitually reminds me of the importance of my resolution because they want me to be healthy and to stick around for a long, long time.
If your News Year’s resolution was to improve your financial health, there is no better place to start then with your credit. After all, the better your credit, the less you pay in interest for things like car loans, mortgages and sometimes even insurance.
Improving credit is a lot like losing weight: it takes time, and while there are no quick fixes, persistence and discipline will keep you on the path to financial health.
With that, here are five tips to help improve your credit:
GET COPIES OF YOUR CREDIT REPORT—THEN MAKE SURE INFORMATION IS CORRECT. As I say repeatedly in this blog, “knowledge is power.” You can’t fix it if you don’t know it is broken. Under federal law, you are allowed to get a free credit report from each of the three national credit reporting agencies every twelve months. Go to www.annualcreditreport.com, the only authorized online source for your free credit report. You can also call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Your credit report may contain errors. Check to make sure that there are no late payments incorrectly reported and that the amounts owed for each of your open accounts are correct. If you find errors, dispute them with the reporting agency. Remember to thoroughly check all three reports because what shows up in one report may not necessarily show up in another.
PAY YOUR BILLS ON TIME. With these unfortunate economic times there are many out there who have to choose which bills to pay each month because there’s just not enough money to pay them all. There are others who are just a little scattered brained when it comes to getting the bills paid on time. If you’re one of these people you are really shooting yourself in the foot. A little bit of financial organization will go a long way in improving your financial health. One of the most important things you can do to improve your credit score is to pay your bills by the due date. If you can’t find the time or the will to get yourself organized, considering setting up automatic payments from your bank to help get those bills paid on time, but be sure you have enough money in your account to avoid overdraft fees.
REDUCE THE AMOUNT OF DEBT YOU OWE. Reducing the amount that you owe is one of the most valuable things you can do to improve your credit. Sure, I know, easy for me to say but the fact is that high outstanding debt can dramatically affect your credit. If you have high credit card debt, look at how much you owe, what your interest rates are and develop a payment plan that pays down the highest interest rate cards first while maintaining minimum or lower payments on your other cards.
DON'T CLOSE UNUSED CREDIT CARDS. Some reasonably think that as a quick way to improve your credit is it so close old cards that you no longer use. The reality is that the opposite is true, closing those cards will negatively impact your credit. The better thing to do is to actually use those cards at least once a month and then immediately pay them off, I call this “credit card maintenance.”
IF YOU DON’T HAVE ONE GET A CREDIT CARD. Having and using a credit card can go a long way to improving your credit. If you don’t qualify for a credit card, consider getting a secured” card from your bank where the credit limit is equal to a deposit you make, think of it as a pre-paid credit card.
To summarize, getting your financial health in order first about knowing what’s in your credit reports, then about fixing errors and finally about adjusting your credit management practices. Do these things and put yourself on the path to good credit health for this New Year and beyond.
Remember, knowledge is power so get your credit report and see what’s in it!
About the Author
Robert Nahoum is a Hudson Valley attorney practicing consumer protection and general litigation in the Tri-State Area including New York City, Westchester, Rockland, Nassau, Suffolk, Bergen County New Jersey and Fairfield County Connecticut. His practice includes consumer protection, Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), debtor’s rights, debt defense, mortgage foreclosure and general civil litigation.
Robert J. Nahoum, Esq.
The Nyack Business Center
99 Main Street, Suite 311
Nyack, NY 10960-3109
Ph: (845) 450-2906
Fax: (888) 450-8640
Knowledge is power and it is my intention to empower my readers to be victors instead of victims when the go out in the marketplace.