By Jennifer Calonia, Editorial Manager
When it comes to finances, there are a number of goals that you might have established, such as saving money, paying down debt or targeting new investments. However, improving your credit score can easily be a neglected aspect of improving your financial outlook.
Credit is an important facet of your financial stability, as it influences everything from buying a car or home to whether you get that job offer you've been hoping for.
Here are nine things you can do starting today to maintain a good credit score.
1. Keep Credit Card Balances LowFICO scores, the most popular credit scoring method used by lenders, weighs 30 percent of your credit score on existing amounts owed on credit accounts. A 10 percent credit utilization is ideal when improving your credit score. Credit utilization is calculated as:
"Financial companies love profitable customers who run up their credit card balances, right? One might think," said Randy Padawer, vice president of credit services at LexingtonLaw. "But interestingly, that same industry penalizes consumer credit scores as a direct result. To ensure a good credit score, never max out your credit cards. For an even better score, keep balances as low as possible."
2. Avoid Impulsive Retail Decisions
Impulsiveness has its place in areas outside credit repair. When targeting a good credit score, however, making hasty decisions often ends in credit complications down the line.
Padawer warns shoppers of retail credit card solicitations at the checkout counter that promise a discount on purchases.
"Big box stores might offer small price reductions with credit approvals, but resist the fool's bargain," Padawer said. "Too many cards may paint you as someone who depends upon borrowed money just to get by, and that's why credit scores almost always suffer in turn."
3. Look for Errors on Your Report
With prospective landlords, employers, lenders and other creditors scrutinizing your credit, it's on your shoulders to do your due diligence in spotting errors on your annual credit report.
If you find a discrepancy, report the issue to credit reporting companies as soon as possible. According to the Federal Trade Commission, companies typically must investigate disputes within 30 days of receiving a correction request.
4. Make Timely Payments
Poor payment habits can be the biggest detriment to improving your credit. 35 percent of your FICO score is determined by your payment history. A track record of late payments or missed payments will result in a downgrade of your score.
Stay on top of payment due dates, and for added safety, make sure to schedule payments with enough time to clear before your creditor's deadline.
Keep reading: Understanding Credit Scores and Which Ones Really Matter
5. Know All of Your Credit Scores
The FICO score isn't the only credit score creditors can base their decisions on; in fact, the three credit reporting bureaus -- TransUnion, Equifax and Experian -- pulled together to create their own credit scoring model, called the VantageScore.
While FICO is used by more creditors to determine creditworthiness, being aware of your VantageScore and working to improve it can help you look your best should a creditor decide to use this algorithm instead of your FICO score. It can also be used as an educational tool to see where your strengths and weaknesses are.
6. Avoid Going on an Application Spree
In the same vein as Padawer's warning that applying for retail credit cards could make credit bureaus question your sudden need for a bigger credit line, too many credit inquiries as a result of multiple credit card applications looks suspicious and can reduce your credit score.
New credit impacts your FICO score by 10 percent, which can be all that's needed to kick your credit score one level up.
7. Use Credit to Get Good Credit
If you have bad credit and are in the process of rebuilding it, applying for a secured credit card can be a safe way to go about improving your credit score.
Secured credit cards are lines of credit that are secured with a deposit made by the cardholder. Usually, the deposit is a low amount and also acts as the limit on the secured card. Develop responsible usage and repayment habits, and you could see your credit score start to rise after a few months of steady use.
8. Diversify Your Credit Types
Installment lines of credit, such as a car loan, student loan or mortgage, contribute to your calculated score, but a good credit score has a mix of both installment credit and revolving credit, like a credit card or home equity. This balance of credit types accounts for 10 percent of your FICO, which is significant enough to not be neglected.
9. Enlist the Help of a Professional
"Credit report repair professionals can help you challenge questionable items with your creditors and with the credit bureaus," said John Heath, directing attorney of LexingtonLaw.
Seek the assistance of a credit repair service if you sense that you'll need to dig deeper into negotiations to improve your score.
As you go through the process of raising your credit score, keep in mind that improving those three digits takes time. But by resolving to earn a good score, you'll do your credit a great service beyond the new year.