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New Year's Resolutions for Credit Empowerment

The beginning of a new year can be a great time to take stock and set goals that might change your life for the better. If you're not happy with your credit standing at the moment, consider a New Year's resolution to better understand what's impacting your credit. Your credit health is important because it can save you money and open the door to opportunities you might miss out on otherwise.

Of course, everyone's credit situation is unique—like a digital fingerprint. That means figuring out what you need to know about your individual credit situation may require a little research.

Thankfully, some basic credit resolutions have worked well for others in the past. Below are five New Year's resolutions for credit empowerment that may help inspire you to create your action plan for the upcoming year.

1. Resolve to be informed.

The first step is to know where you stand. That's why it's wise to check both your FICO Scores and your three credit reports—and to do so often.

You can conveniently review and monitor your FICO Scores alongside your credit reports through the myFICO website. Seeing your reports and scores side by side can help you discover how the different information on your credit reports affects your FICO Scores.

Thanks to the Fair Credit Reporting Act (FCRA), your free credit reports are available to claim once every 12 months from all three credit bureaus as well. (Note: You can claim free weekly reports through April 2021 in response to the coronavirus pandemic.) To access your free reports, visit or complete and mail in an Annual Credit Report Request Form.

2. Resolve to correct credit reporting errors.

Once you download your three reports, you should take the time to go over them in detail. Be on the lookout for any problems like accounts that don't belong to you, negative information that's been on your credit report for too long, or account details that just don't look right. Negative information on a credit report, especially if it's incorrect, has the potential to damage your credit score.

3. Resolve to pay on time.

There are many factors on your credit reports which can influence your FICO Scores. But the information that has to do with your payment history is the most important. Payment history affects over one-third of your FICO Score—35%, to be precise.

One way to set yourself up for credit success is to make a habit of paying your bills on time.

4. Resolve to tackle your credit card debt.

The debts you owe can often have a significant impact on your FICO Scores—especially credit card debts. Credit utilization, defined as the percentage of your available credit card limits in use when your score is calculated, is an important factor that scoring models consider when evaluating your credit risk. When your credit card limits are close to maxed out, your credit utilization will be high. This could hurt you where your scores are concerned.

As a rule of thumb, you should aim to keep your credit card balances low. If you can pay your full statement balance off each month, you may protect your credit scores and will likely avoid paying expensive interest costs as a bonus. But if you owe a lot of debt and can't afford to pay it all off at once, even small steps toward reducing your credit card balances (and hopefully your credit utilization rates) might benefit you.

It's worth mentioning that the credit card balance that appears on your credit report may be different than your current account balance. Many credit card issuers only update your account information with the credit bureaus once a month. Often (though not always), it's the account balance from your last statement that appears on your report. So, if you're trying to lower your credit utilization rate, it might be helpful to pay down your credit card balance before the statement closing date on your account.

5. Resolve to shop around for the best credit

Make sure you're shopping around to get the best deal based on your FICO Score.

If your FICO Score changes, there's a chance you might qualify for financing and services that were out of reach for you in the past. For example, if your FICO Score moves from a "fair" rating to a "good" rating, you might be able to qualify for loans or credit cards that you weren't eligible for previously. A different FICO Score might also help you qualify for housing leases and other perks. And don't forget that changes in your credit can impact interest rates and insurance premiums.

Want to see how much money a higher FICO Score might save you? Check out the myFICO Loan Savings Calculator. This free tool can show you how your FICO Scores can affect the interest you pay on certain types of financing. Reviewing your potential savings opportunities can be a great way to stay motivated as you work hard to reach your New Year's credit resolutions.

Michelle Black

Michelle Black, Founder of is a leading credit expert, financial writer, and speaker with nearly two decades of experience. Her work has been featured with major outlets such as Forbes, Reader's Digest, and U.S. News and World Report.