By Alena Kairys

Jan 14, 2022

It’s never too late to make a change in your life, and getting your credit score in order is an excellent resolution to set for yourself. A healthy credit score has numerous benefits, especially if you want to buy a home in the future. Here are 5 credit resolutions to make (and keep).

1. Pay Bills on Time

Making sure you pay your bills on time is one of the simplest ways to improve your credit score, but it can also be one of the easiest things to forget. Payment history makes up 35% of your FICO score, and missed payments, especially frequent ones, can seriously damage your score. To avoid missing an important bill, consider setting up autopay so you’ll never forget. If you set up autopay, always review the statement to ensure there are no issues, and make sure your account has enough money for payments. It’s ideal if you’re able to pay your bills in full, but if you’re unable to, at least make the minimum payment. Building a history of timely payments helps boost and maintain your credit score, it also makes you seem more attractive and responsible to lenders when applying for a loan.

2. Pay Down Debt

Most everyone has debt, and getting rid of it could be another resolution in itself. It can seem impossible to minimize your debt, but the key to lessening your burden is to chip away at it little by little and to avoid taking on new debt. Not all debt is made equal, so consider prioritizing those with high or compounding interest rates. Making extra payments to the principal of high interest loans will reduce the amount you owe, save you money on future interest payments, and boost your credit score. If you’re unable to make an extra principal payment, try making minimum payments so your loans don’t become delinquent. Debt doesn’t just affect credit, it also affects your debt-to-income ratio (DTI) when you’re looking to buy or refinance a home. DTI measures how much money you have left each month after paying your existing bills. Having a DTI of 36% or less is usually favorable to lenders because it means you have enough to make mortgage payments. Additionally, the psychological benefits of minimizing debt are immeasurable.

3. Lower Credit Utilization

Just because you have multiple lines of credit at your disposal doesn’t necessarily mean you should use the maximum amount. 30% of your credit score is determined by your credit utilization ratio, or how much of your available credit is being used. When you’re using a large amount of your credit, it increases the likelihood that you will have problems paying it back, which negatively impacts your score. To calculate your credit utilization ratio, divide the total amount you owe by your total credit limit, and then multiply that number by 100. A credit utilization ratio of no more than 30% is recommended. If your number is greater than that, try cutting back on expenses and how often you put purchases on credit. When it makes sense, opt to pay for things with cash or even a check. Additionally, don’t close any lines of credit. Closing an account will decrease your credit limit, and therefore, your score. For accounts you don’t want to use anymore, simply stop using them and ensure there are no recurring charges on it.

4. Make a Budget

A well-made budget can serve as a foundation for your finances and prevent excessive debt and credit issues. Track your current spending habits and identify where you can cut back or substitute with a cheaper option. Divide up your monthly spending into broad categories, such as living expenses, transportation, and entertainment, then compare it to your monthly income. If you feel overwhelmed trying to sum up your spending, gather one month’s worth of bills to get an idea of where your money goes. There are also many free resources online to help organize your finances, like budget worksheets. Now that you’ve created your budget comes the difficult part—sticking to it. Should you find yourself tempted to break your budget, ask yourself honestly if the expenditure is more of a need or a want. Following a budget can take a lot of willpower, but it’s well worth the effort when doing so can improve your credit and allow for greater financial freedom in the future.

5. Monitor Credit Information

Staying informed of your credit information is a must, regardless of your current score. Not only will it tell you where your credit currently stands, it will also inform you of any inconsistencies. Be sure to review your credit report at least once a year for errors. You are legally entitled to a free report from each of the three credit bureaus (Equifax, Experian, TransUnion) each year, and it’s recommended to request one from each agency since they differ slightly. Don’t worry—requesting your credit report is considered a soft credit pull and will not lower it. If you notice any issues, take steps to resolve them immediately. You should also monitor your credit card statements for mistakes. Just as you get yearly health checkups, the same should be done for your credit.

As with any type of goal or resolution, improving your credit involves new habits, patience, and dedication. Though it will take time and effort to see the results, having a healthy credit score will give you more options and better opportunities in life.


If you have any questions about your credit, contact one of our licensed Mortgage Loan Originators. If you’re ready to begin t­­he home buying process, click here to get started!

NFM Lending is not a credit repair agency, financial advisor, or debt settlement company.

These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact us.