By: kjmena

The beginning of a new year is the perfect time to assess your credit score and history in order to start making changes for the better. You can think of it as a clean slate, where you haven’t yet made any mistakes and can still learn from past experiences.

Just a reminder that credit scores are ranked on a scale from 300 to 850, this scale will determine whether you have good or bad credit depending on where your credit score falls. For those with credit scores that are already good, this would be a good time to see what changes have helped improve your score significantly and continue to follow that model and to see what else you can do to maintain your excellent credit history.

Assess & Mange Your Your Debt Load to Improve Your Credit

Most people with credit cards think that they know how much they owe on each, when in fact they might owe more and in some cases even less than they think. Instead of just assuming your debt load amount, go ahead and calculate this number. Knowing how much you owe in credit cards is important if you want to start out making changes. You can’t make changes if you aren’t aware that there is a problem.

Once you have calculated this amount start making a plan to tackle and decrease your debt. These changes can happen gradually, so don’t feel pressure to make drastic changes or else you could end up not achieving your goals. Which could result in you losing your motivation and falling deeper into debt.

Decrease The Number Of Credit Cards You Use

If in the last year you were using more than 3 credit cards regularly, you might want to try to eliminate one or a few. Having too many credit cards, can make it difficult to keep up with monthly payments and can make you spread your personal finances too thin.

When it comes to credit cards, a good rule of thumb is to only have about 3: one specifically for emergencies, one that you use for large purchases (i.e. trips, electronics, etc.) and the last one for daily use. Allocating each one of your credit cards for specific uses will make them easier to track and easier to manage your debt on them.

Start Saving

This is just as important as decreasing your debt, being that saving money is one of the best ways to combat debt. Saving can be done on a very small level, there is no particular amount that you need to be putting away daily or weekly. However, the more regularly you put money away the easier it becomes to budget around your savings goal.

This can be done by opening a separate savings account at your current bank or setting up an online savings account. The best way to do it is by setting up an account somewhere different than where you currently bank so you can avoid the temptation of spending it.

Begin Talking To Your Creditors

This might sound scary at first but creditors are actually there to help you, not hinder your credit, you just need to utilize them. Creditors will work with their debtors to try organize a structured payment schedule or plan or even improve the conditions of your current line of credit with them.

Also having an open line of communication with your creditors is going to be beneficial down the line when you are having problems paying of your debts or when you trying to refute a charge. They will be more likely to listen and believe you once you have a rapport with them.

Check Your Interest Rates

This is an important aspect of knowing how much you owe in debt. Not to mention, an interest rate is what increases your debt amount and can end up costing you more in the end than your principle debt amount.

Also interest rates can change depending on the conditions of your credit card, knowing when these changes can happen is crucial if you are going to improve your credit. Sometimes one missed payment could increase your interest by double. Go back and look at the fine print of your credit card applications and read through the ‘Terms & Conditions’.

Fixing Your Credit Is A Process

Remember that improving your credit score is a process that takes time, it definitely won’t happen over night. The best thing to do is stay committed and dedicated to your strategy for bettering your credit.

Try to make a detailed plan so that you won’t forget any steps or actions you might need to take. Also the more specific the plan, the easier it will be to stay on track because you will know exactly what to do.

This is also a good time to start making a budget plan as well, since paying back your debts are part of any good credit plan.