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We’re not going to lie—2020 was a tough year for everyone. Between COVID-19 and pandemic-driven layoffs, we’re all ready to move on from last year. So, what are your new year’s credit resolutions for 2021? Do you want to improve your credit score, pay your bills on time or create a savings plan?
If you haven’t thought of any financial resolutions yet, don’t worry. We’ve got a few suggestions. Here are some tips on how to stay on top of your credit and make your money work for you in 2021:
- Get on Board with ExtraCredit
- Build Your Savings Account
- Pay Bills on Time
- Get Your Taxes Done Early
- Open a Few Extra Credit Accounts
- Maintain a 30% Credit Utilization Rate
- Check Your Credit Score Regularly
1. Get on Board with ExtraCredit
The more you know about your financial profile, the better off you’ll be. You can monitor, build, earn, protect and restore your credit profile with ExtraCredit from Credit.com. Fully loaded and intuitive, ExtraCredit includes five powerful tools to help you stay on top of your money:
- Build It: Build It adds information about your rent and bill-paying habits to your credit profile. Whenever you pay on time, you get kudos—and your on-time payments are reported to all three bureaus.
- Guard It: A staggering 14.4 million people became victims of identity theft in 2019. Guard It comes with Dark Web Monitoring, which scans hidden sites and nefarious file sharing sites for consumer data breach information. Guard it also includes a Compromised Account Monitoring feature and valuable Identity Theft Insurance.
- Track It: Believe it or not, you have at least 28 different FICO scores. That’s a lot to keep on top of. Thankfully, you can keep track of all of them through Track It.
- Reward It: When you sign up with ExtraCredit, you get a rewards card in the mail. It’s preloaded with a $5 signup bonus, and you earn more money every time you’re approved for a Reward It financial offer.
- Restore It: Credit score looking a little low? Restore It connects you with a leading credit repair company in your state so that you can begin to solve problems on your profile. Better still, you get a signup discount at CreditRepair.com or at an equivalent leader in your area.
2. Build Your Savings Account
Almost everyone could have done with a little extra money in 2020. So, what’s the best savings option on the market? Both savings accounts and money market accounts are Chime a go? Chime has a lot of neat features, including a clever automatic savings tool and a competitive 0.50% Annual Percentage Yield interest rate—10x the national average!
3. Pay Bills on Time
You might be surprised to learn that your payment history makes up 35% of your credit score. If you don’t pay your bills on time, your financial outlook can suffer in the long term—so do whatever you can to avoid late payments. If you’re busy or somewhat forgetful, stay on schedule by:
- Automating payments
- Setting reminders on your phone or computer
- Writing payment dates on a calendar
- Creating a bills spreadsheet
Does Your Credit Improve After 7 Years?
In a nutshell, if you have a delinquent debt on your credit report and you don’t do anything about it, it’ll generally drop off after seven years. Late payments are generally removed around the seven year mark, while bankruptcies usually stay on record for seven to 10 years. Unpaid collection accounts stay on record for about seven years—and that timeframe renews if you begin to pay and then stop again. Over time, delinquencies affect your credit score less and less.
4. Get Your Taxes Done Early
Enjoy doing your taxes? No, neither do we. There are benefits to filing early, though. If you file your taxes before the late-tax-season rush, you could get a faster refund. You’ll also reduce the chance of identity theft, avoid penalties and—if applicable—give yourself extra time to save for your tax bill.
5. Open a Few Extra Credit Accounts
The more account types you have in good standing on your credit report, the more likely you are to get approved when you go for a low-interest car loan, personal loan or mortgage. Lenders scrutinize your credit report—and they look for a good mix of account types.
Revolving accounts include credit cards, store cards and home equity lines of credit (HELOCs). Installment accounts are products like personal loans and car loans, which have fixed monthly payments. Open accounts, like charge cards and utility accounts, require payment in full each month. Your unique credit mix accounts for 10% of your credit score.
6. Maintain a 30% Credit Utilization Rate
Credit utilization ratio is the amount of credit you have available versus how much you’re using. If you regularly max out your credit card, your score will almost certainly go down. Instead, try to avoid using more than 30% of your available credit at any one time. If you have a card with a $1,000 credit limit, for example, stop spending when you reach the $300 mark.
Your credit utilization rate accounts for a whopping 30% of your credit score. If you need to borrow a little more money, try asking for a limit increase to avoid messing up your ratio.
7. Check Your Credit Score Regularly
It’s important to check your credit score regularly. Checking your own credit score is a type of soft inquiry, which won’t harm your credit. If you know your credit score:
Whenever you apply for credit, lenders look at your credit score—and often, your entire credit report. This is known as a hard inquiry. Too many hard inquiries and your score could drop temporarily, so try to keep applications to a minimum. If you already know your credit score, you can gauge your likelihood of success in advance.
If you don’t already know your credit score, check out your Credit.com Credit Report Card or sign up with ExtraCredit as soon as possible.
Let’s face it—2020 was a doozy. If you follow a few of our new year’s credit resolutions, 2021 might be a bit better. Maybe you want to increase your credit score, or perhaps you’d like to build your savings account for the future. Either way, slay those at least one financial resolution and shine on in 2021.
Looking for more financial tips for 2021? Check out these helpful articles!
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