The start of a new year is always a good time for self-reflection and optimism, but after the gauntlet that was 2020, it’s more important than ever. Starting 2021 off on a good foot means learning from the mistakes of the past and building toward a better future. If working on your credit score is one of your New Year’s resolutions, there are plenty of things you can do to get started. 

Here are 5 simple tips for how to rethink your credit and financial habits for a happier, healthier 2021.

1. Pay your bills on time

The best way to work on your credit score is to pay your bills on time, every time. That’s because the biggest factor in determining your credit score is your payment history, and late payments can stay on your credit report for up to 7 years. That being said, if you miss a deadline, don’t panic. If you’ve missed your payment by 30 days or less, call your creditor immediately to arrange payment as soon as possible and ask if they will consider no longer reporting the late payment to the credit bureaus.

2. Make frequent payments

Got a little bit of extra cash? Consider making multiple small payments throughout the month. These micropayments will help keep your credit utilization low, which is a big factor in improving your credit score.

3. Keep your balances low

For best practice, you want to keep your balances as low as possible. Don’t just pay the minimum amount every month if you can afford to do more. Pay off as much of your debt as you can each month to keep your credit utilization ratio low and consider asking your card issuer for a higher credit limit. If your credit limit increases and your balances remain the same, it will lower your overall credit utilization ratio, which could help your score.

4. Monitor your score

When it comes to working on your credit score, knowledge is power. Be diligent about making payments on time and check regularly for improvements. Monitoring your score regularly can also help you spot any inaccuracies in the event of identity theft.

5. Dispute any inaccuracies

Review your report from each bureau and look for any errors, like payments marked late incorrectly or negative information that’s out of date. If you spot any inaccuracies, report them immediately, as they may be dragging down your score.