4 resolutions that can help improve your credit health

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4 resolutions that can help improve your credit health

By JENNIFER WILLIAMS

Soon it will be January, and the holidays will be over. After a couple of months of extravagance, many people commit to a resolution -- or two or three -- to start the new year off on the right foot.

Swapping out bad habits with new ones can be difficult, but you can make your New Year's resolutions simpler by choosing ones that can improve your credit health at the same time.

1. Get a gym membership ... and use it.

A popular New Year's resolution is to get more exercise, so why not find a local gym to help you meet your goal? Your health is likely worth the monthly cost, and if you can find a gym membership that fits within your budget, your credit could get a workout, too!

Your payment history can have a big effect on your credit. Making regular charges - with a gym membership, for example - that you can pay off every month shows banks and lenders that you know how to budget your money and can reliably pay back what you borrow.

However, keep in mind that the opposite is also true: Missing a payment or paying late can cause some damage.

2. Get organized.

When life gets busy, it can be hard to tend to all the small details. Getting organized with a daily planner is one way to keep track of important dates, whether it's your anniversary or time to pay off your credit card balance.

Along with the old pen-and-paper planner or Excel spreadsheet, there are also apps that can help you organize your finances. For example, Mint keeps track of how much you spend and in what categories, such as groceries and entertainment.

Another app, Digit, helps you save small amounts of money every month and sends daily texts about your account balance.

Plus, many banks offer the ability to make automatic payments and set payment alerts via text or email. Making a late payment can result in a late fee, hurt your credit score and even result in a higher interest rate, so it's best to make payments early or on the due date.

3. Simplify your life.

Decluttering your space can make it easier to focus on what's really essential in your life and help you spend less time worrying about a bunch of unnecessary stuff. Just don't forget to clean out your wallet, too.

If you have several credit cards or loans, consider consolidating. By paying off multiple lines of credit with a single loan or credit card, you'll only have to make one monthly payment. Got federal student loans? You might be able to consolidate multiple loans into just one with one fixed rate.

If you're interested in refinancing, which involves paying off your original loan(s) with a new one, there are a few things to keep in mind. First of all, you'll likely need a high credit score and possibly a co-signer to qualify. Secondly, if you refinance federal loans, you might lose some or all of your federal loan protections.

4. Love yourself.

If you want the best for yourself, you might have to look more critically at your bad habits. By being more open with the problems you're facing, you might see that lots of people face similar struggles as you.

For example, when it comes to finances, some debt or a low credit score may be nothing to be ashamed of. Sometimes a medical bill goes to collections without your knowledge, or a couple of late payments might have lowered your score.

If you don't accept your past mistakes or accidents, it can be too easy to sweep those issues under the rug. But ignoring a problem often makes it worse.

"If someone is afraid to look at their bank statement or open up their credit card bill, they're not yet fully acknowledging where they are financially, and not yet committed to making changes," says Pedro Silva, a financial adviser with Provo Financial Services.

"Much like loving yourself requires awareness and acknowledgement of where you are emotionally, empowering yourself financially has to start with the same type of deep look at where one is starting from."

And knowing which areas of our life we want to improve clears the path to actually making positive changes.

Lastly, being aware of your debt, monthly payments and bills -- instead of feeling ashamed and ignoring them -- can help you feel empowered and in control of your finances, and you can start making money choices out of love for yourself instead of fear.

Bottom line

Pick a New Year's resolution that is both realistic for your life and something you feel passionate about. If you have fun while making changes in your life, it won't feel like such a chore.

And remember to be easy on yourself. Some people might be able to take on several new changes, while others find one change at a time is more sustainable.

Being your best self usually involves setting a goal and sticking to it regularly until it becomes a habit -- the same skill can give your credit a boost.

About the Author: Jennifer Williams is a QA Specialist in Member Support at Credit Karma. She has her MFA in Fiction, and puts her skills to use helping members and training new hires. When she's off the clock, she can be found editing her novel, playing guitar, or hiking with her dog in the hills.

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  • Baby Step 1: $1,000 cash in a beginner emergency fund
  • Baby Step 2: Use the debt snowball to pay off all your debt but the house
  • Baby Step 3: A fully funded emergency fund of 3 to 6 months of expenses
  • Baby Step 4: Invest 15% of your household income into retirement
  • Baby Step 5: Start saving for college
  • Baby Step 6: Pay off your home early
  • Baby Step 7: Build wealth and give generously

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