5 New Year’s Resolutions For Your Financial Health

blog-5-new-years-resolutions-for-your-financial-health2013 wasn’t a banner year for personal finances. In fact, 77% of consumers admitted to having financial worries, and 40% of adults gave themselves a grade of C, D, or F on their knowledge of personal finance.Sound familiar? Change starts now.

 

Taking control of your finances and credit is one of the most important things you can do for your future (think retirement, a new home or a college fund). As we ring in 2014, make a new year’s resolution for your financial health. Here are five resolution ideas to get you started.

 

Resolution 1: Improve your FICO® Score

This isn’t a quick fix, but you can definitely make substantial improvements to your credit score over the course of the year. You can view your FICO credit scores to get a baseline, and make an improvement goal. Then, simply start making responsible choices. Make your credit card payments on time, lower your credit card balances and be smart when applying for credit cards. Learn more about improving your FICO Score.

 

Resolution 2:  Pay off a high-interest credit card

Interest can really add up. If you’re carrying a balance over every month on a high-interest credit card, you’re wasting money. Every month in 2014, make your minimum payments on other debts, and put any extra money down on your high-interest credit card. Speed up the process by making small cuts to your budget, like buying less coffee or eating at home more often, and put the money you save onto your credit card. Progress might feel slow at first—it gets easier as you pay it  down.

 

Resolution 3:  Stop maxing out credit cards

When determining your credit score, one of the factors that FICO analyzes is your credit utilization. If you are utilizing (borrowing) most of your available credit, you may be a high risk for lenders, so your FICO Score is lowered. As a rule of thumb, try to keep your utilization on any one card, and across all of your credit cards, below 50%. That means stop maxing them out! 2014 is your year to stop spending credit and start paying it off. Learn more about credit card debt.

 

Resolution 4: Clean up your credit reports

In a study done by the Federal Trade Commission, one in four consumers identified errors on their credit reports that might affect their credit scores. Don’t wait until you get turned down for a loan to find the potential errors on your reports. This year, order your credit reports from each of the three credit bureaus review them in detail and dispute any errors. Then, make it a goal going forward to review your reports 1-2 times a year. Learn more about credit reports.

 

Resolution 5: Make a budget and start saving

Having great credit is only half of the formula. You should also have enough money saved to cover emergencies, make down payments and keep your credit utilization low. If you depend solely on credit, your score may eventually suffer. Start 2014 off with a brand new budget. Itemize all of your spending, use our savings calculator to determine how much you should be saving, and adjust your budget to make it happen. Here’s to a financially fit 2015!

 

Kelsey Havens is the Content Manager for myFICO.com

Comments

  1. Patricia K Correia says:

    You’re right about improving your FICO score not being a quick fix. I had cleaned up my reports, and corrected several errors over the course of year, but even with current accounts and on time payments my score did not improve until a 7 year late payment fell off a current open account, then my score jumped 50 points and has been slowly increasing ever since. As far as paying off high interst credit cards, mine all seem to be high interest. How do you diferrentiate? I know 2 may not be because I have 2 that are below 18 % but the others range up to 27 %. How do you get these interest rates lowered? I have had a budget all along and I’m getting the balances down from the 4 emergencies from 2013 and the 2 major disasters of 2012.

    • Michael Cohen says:

      Hey Patricia,

      Happy New Year. Wherever you are, I hope you are staying warm.

      How do you differentiate?
      “the card issuer is obligated to disclose the interest rate being charged. If it can’t be easily located on the statement, call their customer service so they can tell you what it is.”

      How do you get these interest rates lowered?
      “The card issuer sets the interest rate and you would need to contact them with a request to lower. They may work with you, but I have never heard of a card issuer lowering the interest rate on a card “to be nice”. They may try to get you to consolidate all your balances on their card for a lower rate. If you do this, be sure you don’t close down any of your existing credit card accounts (doing so won’t improve your score).”

  2. Thanks for these great suggestions for your financial health. As a Chicago divorce lawyer, these 5 points would be great for my clients to follow in their new life separate from each other.
    Michael C Craven
    Chicago divorce lawyer

What do you think?

Disclaimer: This content is not provided or commissioned by a credit card issuer. Opinions expressed here are the author's alone, not those of a credit card issuer, and have not been reviewed, approved or otherwise endorsed by a credit card issuer. This site may be compensated by credit card issuers mentioned on the site by such companies.