Monitoring Your Credit In The New Year

Having good credit is extremely important for any loan you may obtain, whether it be a short-term one like a credit card, or a long-term loan like those for a home or car. As we start a new year, it is critical to know where you stand and what you can do to improve with your credit profile. Here is a five-step guide to taking control of your credit in 2013:

1: Check Your Credit Report

To improve your credit score and set realistic goals, you first need to know your current credit profile. You have a legal right to obtain a free copy of your credit report from all three major credit bureaus--Experian, Equifax and TransUnion--once per year. Take advantage of this opportunity to discover the details of your credit report.

2: Review & Dispute Errors In Your Report

Review your credit report carefully. Look for any errors or inaccuracies. Make sure you cross-reference all your bank records when checking your report, and then promptly contact the credit bureaus if you find a discrepancy.

3: Understand Where You Stand

No matter what your credit score may be, there is always room for improvement. Understand your score and what put you in that position. If you have above average credit, make sure you uncover what you are doing right and keep doing it. If you have below average credit, figure out what you're doing wrong, how to fix it, and what you should do to improve your score.

4: Set Goals For The New Year

Setting small goals throughout 2013 is extremely important to stay on track with your overall larger goal of improving your credit score and credit profile. For example, you may want to reduce your credit utilization on a certain credit card by $1,000 by April 1st. Or you may want to pay off your car by the end of the year, refinance your mortgage, or some other credit-altering decision. No matter what your goals may be, make sure you set them, document them, and hold yourself to them throughout the year.

5: Remember To Repeat

This is an ongoing process, so make sure you check your credit reports every January and set a plan for the upcoming year. If you stay on top of your credit profile and stick to a comprehensive plan, you should see some improvements in your credit score each year.

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