(Newswire.net — November 21, 2016) — Do you plan to make any resolutions for 2017? While most people stick to the standard – exercise more and lose weight – and then promptly leave their resolutions in the dust come February, this year, why not make a resolution you can actually stick to? Make 2017 the year you improve your credit score, and with it your overall financial outlook, by embracing these five practices.
Pay Down Bad Debt
There’s a difference between good debt and bad debt. Good debt includes things like mortgages, school loans, and business loans. Bad debt includes credit card debts and auto loans. In other words, bad debt is considered debt on things you don’t need.
If you have the financial means, you should pay down your bad debt. You could do this by advancing inheritance money, applying structured settlement money, or liquidating other assets to cancel out the debt. Remember, bad debt hurts your credit score and you should do whatever you can to pay it off.
Check Your Interest Rates
The next thing you should do in the interest of improving your credit score is to find out what your current interest rates are. If you’re paying a lot of interest on current balances, apply for cards with lower interest rates. Many cards also give you a period of zero interest as a new customer, including on balance transfers. Take advantage of this and shift money from high-interest cards to these lower interest options.
Pick The Right Cards
Another factor to consider when using your credit cards are the rewards they offer. For example, if you use your credit card primarily to pay for groceries, you may do better sticking with a higher interest card that offers better grocery rewards. If you resolve to pay off those cards quickly and manage to rack up a lot of rewards, it can be even better to charge your groceries than to use a debit card.
Spread The Wealth
Finally, many people think that if they want to improve their credit score, they should reduce the number of cards they have and not apply for new ones. This isn’t always the case, however. Sometimes, having more cards can actually improve your score because there are several different factors that go into calculating your credit score. One of these factors is known as your credit utilization ratio.
If you have more cards with less credit used on each of them, your credit utilization ratio will be lower than if you used all or most of your credit on one or two cards. This has a beneficial impact on your overall credit score. Keep an eye on how much of your total available credit you’re using as you work to build your score up.
Improving your credit score can significantly improve your financial future, helping you to buy a home or a car, get a better mortgage rate, or receive a credit card with a higher limit and better rewards. Become familiar with that number in 2017 and focus on watching it tick upwards. This is a resolution that anyone can keep.