2011 is here!  Consumers often tell me about their new year’s resolutions and ask how me how they can improve their financial stability in light of their credit score.  The following are some great tips for consumers who are trying to increase their financial stability:

  • Review your credit report.  Your financial future depends on the contents of your credit report, especially your credit score.  The first step should be to obtain your free credit report.  Since you can access your credit report free of charge, there is no reason to neglect this important piece of your financial life. Consumers are allowed one free report from each of the three major bureaus once every twelve months. You can get all three at once, which is a good idea if a major purchase is on the horizon, or stagger your requests to check for identity theft. Access your report from .  Once you receive your credit report, then you should review it for its accuracy.  If you have any problems reading the report, then you can call consumer credit lawyer Micah Adkins for free help.  If you find errors on your credit report, then you should dispute the inaccurate items to each of the credit bureaus, i.e., Equifax, Experian and Trans Union.  If you need help disputing the inaccurate items, then you can contact Micah Adkins for free help.
  • Obtain your credit score.  Your credit scores from each of the three credit agencies are a major indicator of whether or not a credit grantor (i.e., potential creditor) will extend credit to you, and if so, at what interest rate. By law, Equifax, Experian and Trans Union do not have to give you your credit score for free, so you will have to pay for it.  Your credit score can be from 300 to 850.  The higher the score the greater the likelihood that you will be able to obtain credit.  The higher the score the lower interest rate, which can save you thousands of dollars!
  • Reduce your debt.  When you obtain new debt (i.e., credit), this is an indicator to other potential credit grantors that you are living beyond your means and are a greater credit risk.  Instead, take the credit cards out of your wallet or purse and pay them off as soon as possible.
  • Start saving!  Its tough, but you have to do it.  A savings account can help you from charging against your credit cards or feeling like you need to apply for new credit.  A savings account can also help credit grantors feel more comfortable lending you money.  Consumers with a savings account have a lower risk of defaulting on loans.  One way to start a savings account is to deposit all bonuses, overtime checks, birthday money, etc…into a savings account instead of your checking account.
  • Organize your finances.  Make a list of your creditors, including interest rates, due dates and balances.  Keep all of this information in one location.  One easy way of doing this is to keep a spiral notebook and write down your due dates and payment amount every month.  After a few months you will see trends in your spending and get used to tracking your finances on a regular basis.
  • Pay your bills on time (or early).  When you pay on time, you will avoid late fees.  If you have the resources, the you should pay your bills the day you receive them. When you pay your bills late you get a double whammy.  First, you will have to pay a late fee.  Second, you credit report will be dinged with a 30 day late payment status.  As a result, your credit score may decrease because of the past due payment.
  • Balance your check book.  A balanced check book will help you to avoid overdraft fees.  Enter ATM transactions and purchases into your check book on a daily basis.  A balanced check book will give a snap shot of your current financial condition at a glance.
  • Conduct a monthly family finance meeting.  After you track your spending for 30 days, you should meet with your family members and review spending for the month.  This exercise will help joint account holders keep track of each others spending habits.  It will also encourage younger family members do the same and create good financial habits.
  • Make a budget.  After you have identified all of your creditors, balances, payment due dates and monthly expenses, you will have the information you need to make a budget.  You should start with a tight budget and only loosen it after you have paid off some of your credit cards and started a savings plan.
  • Start a retirement account.  If you are lucky enough to have a 401K plan at work, then you should contribute the maximum amount. Your employer’s match will help you with your retirement plan.  Flexible Spending Accounts (FSAs) is another great way you can reduce your taxable income.
  • Review your monthly ‘fixed” expenses.  You may find that you can get lower monthly payments for your fixed expenses, such as insurance, cell phones, internet, etc….  You can call your auto insurance agent and see if you are eligible for discounts.  You can also call your cell phone or internet service provider and see if they are running any specials.
  • Refinance your home.  If you are planning on staying in your home for at least another 3-5 years, then it may make financial sense to refinance your mortgage.  Rates are low right now and a refinance could significantly decrease your monthly payment.  Beware – you may have to pay closing costs, but you may be able to roll the closing costs into your new monthly payment.  Also, if you can help it, do not extend the mortgage term.  You have worked hard to pay your 30 years mortgage – adding 10 years to the life of the loan will not saving you money!

If you have requested your credit report from Equifax, Experian or Trans Union and you need help reviewing it, then call consumer credit lawyer Micah Adkins for a free consultation.