Tips to Fixing Your Credit in the New Year

Instead of choosing the typical New Year's resolutions-lose weight, exercise more, read a book (or two)- add one that will benefit you financially: fix your credit. It won't be an easy resolution, but it's one that will definitely pay off over the long haul.

Just like Rome wasn't built in a day, damaged credit can't be repaired overnight. If you're making a New Year's resolution to improve your credit, it's going to be a long, slow process.

Why? Because getting a bad credit score is usually the result of months and years of poor financial behavior. You may have overspent, made payments late, or simply neglected to keep tabs on the accuracy of your credit report. Credit scores are based on your behavior over time. Here are some simple ways to fix your credit this upcoming year:

Check your score

If you haven't reviewed your credit report, start out the New Year by ordering it through one of the three credit bureaus (Experian, Equifax, TransUnion) or for free at annualcreditreport.com. Check over the report carefully, reviewing all accounts to be sure that there are aren't any erroneous late fees reported. If you find any discrepancies, including open accounts that you're certain you've closed, notify the credit bureau of the correct information.

Reduce your debt

If you have a low credit score, one of the contributing factors may be that you're carrying too much debt. Review your credit card balances and take a careful look at your overall financial picture. If possible, pay off some of the credit cards and reduce your spending to get your budget back in line.

Consolidate payments

Paying your debts late can be extremely detrimental to your credit report. If you find that you can't keep track of all your credit cards and personal loans, limit the number of accounts. You might want to pick one credit card to use for all your purchases, instead of using multiple accounts. You may even want to consolidate all those various accounts into a debt consolidation loan, and open a new credit card with a great rewards program. If you pay the balance every month, you'll be making timely payments and earning a reward at the same time.

Monitor your score

Keep tabs on your credit score by ordering a report every three months. See how your plan is taking shape, and whether your score is increasing on a regular basis. This will reassure you that you're making progress, and will get you into the habit of routinely checking your credit report for its accuracy.

The number one rule for fixing your credit score is patience. Your poor credit score didn't happen overnight, and repairing it will be a long-term project, too. Try not to get antsy for dramatic improvements in your score. Remember, slow and steady wins the race. As you slowly whittle away your debts and discipline your payments, your credit score will steadily improve.