One way to cut the sting of credit card bills is to set a
new agenda when it comes to credit. So consider the following
ideas when setting your credit resolutions for 2012:
Set dates for getting your credit reports:
Each year, you should check each of your credit reports
from www.annualcreditreport.com directly. You should spread out
your requests, making requests quarterly so you can catch
errors that might come up at different parts of the year and
spot identity theft.
Get your credit score once a year:
A credit score is a three-digit number that reflects the
credit history detailed by a person's credit report. Go to
www.myfico.com to retrieve your credit score once a year from
one or all of the three credit bureaus.
Lock up cards; don't cancel them:
Do whatever it takes to limit the use of credit cards in
your life, but don't cancel credit card accounts once they're
paid off. Why? Because your credit score relies on the number
of credit lines you have open and in good standing and the
length of time they're open. Lenders want to see a long record
of credit management, and longtime accounts that you haven't
touched in years may actually help your score because it shows
you have some restraint. Remember to use them once a year and
pay the full amount off immediately, to keep credit cards
active.
Pay on time:
Nothing damages your credit standing faster than late
payments, particularly on big loans like mortgages and car
payments. Get current and then resolve to pay in advance of the
due date. A suggestion: once you get a bill, immediately look
for the due date. Then make a note to yourself on a calendar
5-7 days before the due date to put a check in the mail so
you're on time. You can also secure electronic payment options
so you can pay closer to the due date or automatically.
Monitor credit problems:
If you've filed bankruptcy or had a debt put in
collection, it takes years to remove those events from your
credit record. Determine the month that data should leave your
report and make sure you follow up to make sure that removal
happens.
Choreograph your payments:
If you have multiple balances you need to eliminate,
schedule a payment order right now starting with the
highest-rate balances first.
Keep your balances low:
If you carry balances over 50 percent of your credit
limit on any account, it might lower your credit score. To
remedy this, use several cards to spread out the balance - and
pay them off - or ask the creditor to raise the limit on the
card.
Limit your credit inquiries:
The next time you go to a department store, you might be
offered a chance to save 10-15 percent on a purchase if you
agree to apply for their store card. At the same time, you'll
probably continue to get plenty of credit offers in the mail.
Shred all direct mail credit solicitations the moment you get
them, and as for in-person credit offers, just say no.
Research big loans in advance:
Always ask a potential lender which credit bureau they use to
make their decisions. Auto, mortgage and other lenders may
prefer one credit bureau over another, and if you plan well
ahead of your purchase, you should aim to correct errors in
your credit report and try to get your credit score as high as
you can.
Track your spending:
If you've never made a concerted attempt to track your
spending - all your spending, not just what you've put on
credit cards - do so this year. If you have a computer, buy a
financial management program that makes it easy for you to
download your banking and investment accounts, any remaining
credit accounts and record all your cash expenditures down to
the last pack of gum.
Go debit:
Banks increasingly offer debit cards that double as ATM
cards and carry a credit card brand that allow them to be used
in many business establishments. The key is to put a spending
limit on the debit card equal to the cash you have in the
account linked to it. Responsible use of today's debit cards
can wean you off of credit cards entirely.