I totally love spring. There’s just something in the air that makes you feel like it’s time to clean the slate and start anew.
For some people, this means cleaning out their closets and garages. Other hardy individuals declare war on their fridges and finally root out the stuff in the very back that really, really needs to be thrown out.
Here’s what to do if your credit could use a little freshening up…
The idea of spring renewal is that you kind of get a redo that wipes out your past sloppiness: A new, clean, and uncluttered beginning!
That’s all fine and dandy, but many folks forget that their finances need a good airing out as well. No need to get nervous about this, folks. I promise you’ll feel great when you’re done.
Get your free credit reports
Every 12 months, you’re entitled to three free credit reports from each of the major bureaus: Equifax, TransUnion, and Experian. You can get your official credit reports at AnnualCreditReport.com.
You can either check all of them at one time or spread it out over the year. For instance, you can check your report for Equifax in March, TransUnion in July, and Experian in November.
You want to review each line item for accuracy, including all of your personal information, such as your Social Security number and birth date. Check all of your accounts and look at the balances to see if they appear accurate.
Also note if there are accounts listed that aren’t yours. This could indicate fraudulent activity and you’ll need to contact the bureaus immediately to protect your identity and credit history. You can find more information about this on the FTC’s website page for ‘Place a Fraud Alert.‘
If you have delinquencies, confirm the dates and determine if an item should have dropped off your report by now (most fall off after seven years, but a Chapter 7 bankruptcy takes 10 years to drop off your report).
If you do find errors, take action right away because this might be lowering your credit score. You can find the steps for reporting inaccuracies on the FTC’s website page for disputing errors on credit reports.
Find out if your credit score has improved
Has your credit score improved this past year? If so, you might qualify for a better APR on your credit cards.
One way to tell if you’ve moved up the credit ladder is by reading the credit card offers you get in the mail. Are you getting better APRs on the new offers? If you are, call your issuer and ask for a better rate. And it doesn’t hurt to have the new offer in hand when you make the call.
Another way is to buy your FICO score on myFICO.com or to sign up for a free educational credit score from a website, such as Credit Karma. Also, many issuers are now providing free credit scores on your monthly statements. In this case, you can review past statements to see if your score has made a steady improvement.
Review your budget and make adjustments, if needed
Do the numbers still reflect your current financial situation? Has your income increased or decreased?
It’s actually a good idea to revisit your budget any time during the year when your income, expenses, or debt obligations change. But if you haven’t been doing that, now’s the time!
After you update your income and expenses, look at your positive (or negative) cash flow for the month. If you are now having problems paying your bills, try to cut back on any expenses that you can. A negative cash flow often leads to credit card debt and that will make your situation much worse.
If you feel you’re drowning in debt or simply can’t make ends meet, reach out to a credit counselor for a free introductory call. You can find a licensed and reputable counselor via the National Foundation for Credit Counseling.
Tackle your credit card debt
If you have a positive cash flow each month and you have credit card debt, decide on a strategy to pay it off. If you still have a good credit score, you might qualify for a balance transfer credit card that offers a zero percent APR for a period of time.
This is a golden opportunity to pay off your balance without paying interest for a year or more. Most of these do charge a transfer fee, which ranges from 3% to 5%, so be sure you include that in the total amount you have to pay back. In many cases, you’ll still come out ahead because you’re saving so much on interest.
If you can’t qualify for a balance transfer card or for a consolidated personal loan, pick a strategy for paying off the debt on your own. With persistence and self-discipline, you can do it!
Set your financial goals
You need to set both short-term and long-term goals. Short-term goals might include something like this: I’ll pay off one of my credit card balances within 90 days. And a long-term goal might include something like this: I’ll pay off my car loan by December 31, 2018.
But also think about what you’d like to accomplish in five years or so. For example: I’ll have enough money saved for a trip to Italy by the summer of 2022.
Get the idea? You can track your goals by creating a spreadsheet, using a bulletin board with photos of your goal, or even setting up a “Financial Goals” board on Pinterest.
As a matter of fact, one of my goals is to go to Italy and I have a Pinterest board full of photos of destinations I’m excited about. When I wonder if I want to save money for the trip or spend the money for something I can have right now, I look at that board and stick to my plan. Hey, it works every time.
So find a way to help you keep your goals in mind while you’re working on them. Life may be short, but with proper planning, you can save enough money to tackle at least some of the items on your bucket list.