If you think this article’s title sounds a little dramatic, that’s by design. But the truth is, the condition of your credit actually has a massive influence over your life. Having bad or even mediocre credit can easily cost you hundreds of dollars a month, thousands of dollars a year, and tens or even hundreds of thousands of dollars over the course of your life.
Your credit reports and credit scores are relied upon over and over again by companies deciding whether or not they wish to do business with you. The health of your credit is relevant when you apply for a loan, fill out a credit card application, try to lease an apartment, open a new utility account, take out a new insurance policy, and sometimes even when you apply for a job. The importance of your credit simply cannot be overstated.
Now that you realize that your credit matters, it is a great time to figure out how you can improve it. Here are four killer New Year’s credit resolutions that can help you improve your credit in 2017.
Resolution #1: Check Your Credit Reports Often
It’s your personal responsibility to make sure the information contained in your credit reports is accurate. No one else is going to be as good of a steward of your information as you will be. Thankfully, keeping an eye on your credit reports is easier than ever, and free.
First, thanks to federal law, you have the right to access all three of your credit reports for free every 12 months at . Additionally, there’s no shortage of websites that will grant you free access to one or more of your credit reports every month if you agree to view advertising for credit services (loans, credit cards, and the like). Point being, there’s simply no excuse to not become more engaged with your credit reports.
Resolution #2: Don’t Let Credit Errors Slide
If you check your credit reports and discover an error, you should do something about it. The Fair Credit Reporting Act gives you the right to dispute suspected errors with all three of the credit reporting agencies – Equifax, Trans Union, and Experian.
You can dispute errors all on your own or to hire a professional to do the work for you. If you do choose to hire someone, just make sure to do your due diligence ahead of time and confirm that the company with which you work is trustworthy.
Resolution #3: Make On-Time Payments a Priority
It doesn’t take a credit expert to know that late payments are a really big deal on your credit report. One of the most important factors considered in the calculation of your credit scores is whether or not you make timely payments on your credit obligations.
Earning great credit is going to be an impossible task until you break the late payment habit. And even when you do break it, you’re going to have to wait seven years for the record of your late payments to be removed from your credit reports. So, start now!
Resolution #4: Tackle Your Credit Card Debt
Your credit card debt is another extremely important consideration when your credit scores are calculated. The fact is, credit card debt lowers your credit score, even if your payments on the accounts are always on time. That’s because credit card balances eat into your credit utilization rate, or the amount of your available credit limit that you’ve used up, and that’s the second biggest factor in your credit score.
Making a plan to pay off your credit card debt and to never again revolve balances from month to month is one of the smartest credit score moves you can make. The fact that you may save a ton of money on interest fees is an added bonus, as the average annual percentage rate (APR) for a general use credit card is a brutal 16%.
Resolution #5: Stop Applying for Credit Unnecessarily
Credit scoring models don’t like it when you apply for credit excessively. Apply too often and your credit scores could take a downward slide.
This doesn’t mean you should never apply for credit again. But what it does mean is that you should apply for credit only when you actually need it, and not simply to save 20% off your purchases during the holiday season by opening a bunch of new store credit card accounts.
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is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.