Five Mid-Year Credit Moves to Make Right Now

Summer is a great time to relax and enjoy life, but that doesn’t mean your financial goals have to take a vacation. Now is a good time to re-evaluate your financial New Year’s Resolutions and recommit to better managing your finances and creditworthiness.

Eliminating wasteful spending and saving more money could be positive first steps, of course, but to create lasting change, consider taking steps that are part of an overall strategy that can also include long-term credit monitoring and management.

Here are five moves you could make right now that may help you reach your goals:

1. Check your credit report.

You can order a free copy of your credit report once per year from each of the three credit reporting agencies (CRAs) at AnnualCreditReport.com. Your report may include information on the credit accounts you have open, including when you opened them, any limits on the accounts, and your payment history. Check how much total debt you have outstanding on your credit cards vs. the total of your credit limits (your “credit utilization rate” or “credit utilization ratio“). Many lenders prefer to see a credit utilization rate of 30 to 35 percent or less, as this indicates you have not over-borrowed on your credit cards.

2. Report any issues.

If creditors have reported inaccurate information, or if you are a victim of identity theft or fraud, now is the time to address it. Once you get your credit reports, look them over carefully. Check everything from your name and address to each credit account listed and the payment details. If you discover any errors, you can dispute them for free. Additionally, a credit monitoring service may be able to help you discover future errors, as well as help you better protect your identity.

3. Set up reminders to pay bills on time.

Once you understand your credit report and you have validated the information, you can turn your attention to your credit score. Simply put, a credit score is a three-digit number, typically between 250 and 850, which is calculated based on information in your credit report. It is a simple, numeric expression of your credit worthiness.

Your payment history is the most-heavily weighted factor in determining your credit score (it typically accounts for 35 percent), so making all of your payments on time is critical. Setting up reminders on your phone, computer, or calendar can help you remember when each of your bills is due. You may also be able to set up automatic payments for certain bills. These steps may be able to help you establish better payment habits.

4. Pay down debt.

Most debt can impact your credit score, both from a credit utilization standpoint and from a credit utilization ratio perspective. And of course, debt typically costs money—you pay interest as long as the debt isn’t paid off at the end of the billing cycle. Many experts advise paying down debt with the highest interest rate first as this typically saves the most money in the long run.

5. Evaluate your accounts.

If you have succeeded in paying off a credit card balance, you may be tempted to close the account altogether. However, keeping it open might be beneficial, and closing it might affect your credit score. Therefore, working with a financial professional to carefully evaluate which accounts to maintain and which ones to close may be a wise option to help you keep on track to meeting your New Year’s Resolutions.

Having several active (and current) credit accounts may show lenders that you’re a responsible borrower. In addition, if you’ve had an account for a while, it can help to demonstrate a longer credit history. Therefore, even closing an account could impact your credit score.

Taking a break from the financial stress of everyday life can help you unwind, but don’t relax your vigilance regarding your credit. Making these moves could help you keep your New Year’s Resolutions and stay on top of your credit profile.

Dustin Pellegrini is a senior web producer and writer at Think Glink Media, where he specializes in reporting on identity protection and credit. He studied writing and visual media at Columbia College Chicago.