Toast to a higher credit score this year

Before putting away your party hat and sweeping up the confetti, raise another glass – to a prosperous new year! While you’ll need more than a champagne toast to see real improvement in your credit health, this simple action will remind you to put raising your credit score on top of your financial ‘to-do’ list.

Here are three credit behaviors you can begin in January to nourish your credit score and set the stage for smart money management all year long.

1. Pay bills on time.

Sending creditors at least the minimum payment by the due date is one of the most important things you can do to improve your credit score. On-time payments help you avoid adverse reporting to credit bureaus. Past due payments could also cost you in pesky late fees.

If you’re behind on payments, do everything you can to get caught up. This might include earning more income, reducing expenses, or both. Then, make it easy to pay bills on time by scheduling automatic electronic payments through your financial institution.

2. Reduce debt balances. 

Pay down credit lines by making more than the minimum payment on credit cards and other revolving credit accounts. This lowers your credit utilization ratio, which is the amount of credit you use compared to the total credit available. Credit utilization is only second to on-time payments for improving credit scores. Even a small payment boost can yield powerful results.

For example, if you have a credit card with a $2,000 balance and a $100 minimum payment, pay $150 or more monthly to get rid of the balance faster, save on interest charges, and lower your credit utilization.

Keeping balances below 30% could help maintain a healthy credit score.

3. Give your credit an instant boost.

Experian® is one of the main credit reporting bureaus for U.S. consumers. They offer a free service called Experian Boost® which provides a way to instantly improve credit scores for paying everyday bills on time. Add positive payment histories from rent, utilities, and streaming services to your Experian credit file to see an increase in your credit score.

Start by creating an Experian login. Then, connect the bank account you use to pay such bills to Experian’s system. The company will evaluate each payment for inclusion in your credit report.

Reap the long-term benefits of smart credit behaviors. Use financial tools, like Online Bill Pay, and ensure these simple actions stick around for years to come.