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14 Credit Moves to Make in 2014


The New Year is a good time to evaluate the financial decisions you've made the past year. Here are 14 credit moves you should make in 2014 to improve your credit, ensure you have the best credit card deals, and make strides toward paying off your debt.

1. Know your credit limits.

Start the year by checking your credit limits on all your credit cards. Some of your card issuers may have given you an increase since you last checked. Remember to keep your balance below 30% of your credit limit for ideal credit utilization. Not only will it keep you from creating too much debt, you'll also build a better credit score in the process.

2. Get a better credit card.

Credit card issuers ramped up credit card offers in 2012 and even started offering better credit cards to consumers with lower credit scores. If you haven't opted-out of credit card offers, expect to see more offers hitting your mailbox. People with good credit scores will notice better offers on reward cards and balance transfer deals, with introductory rates lasting as long as 24 months. If you previously decided you didn't want to get prescreened credit card offers, you can opt-in by visiting OptOutPrescreen.com.

3. Pay off a credit card or two

Getting out of debt is a big goal that's best accomplished by paying off one balance at a time. Pick a credit card to pay off this year, it could be one with a low balance (easier to pay off), a high interest rate (you'll save money on interest), or one you don't use anymore (get rid of dead weight).

Use a credit card calculator to figure out what pay off that credit card this year, then work hard to send at least that much money toward that card each month. The more you can pay each month, the sooner you'll be done with that balance.

4. Use all your important cards periodically.

Credit card issuers sometimes close inactive credit card accounts, an action which could hurt your affect your credit score. Some credit cards you don't want to be closed - like your oldest one - so use your credit cards every once in awhile to keep them open and fee free. 

If left dormant for too long, you'll lose any rewards you've earned on your rewards cards. Use your card - or your rewards - before you lose them.

5. Monitor your account closely for fraud.

For years, readers have complained about unauthorized iTunes charges on their credit cards. Thieves can get access to your credit card information in a variety of ways - even if you're doing everything you're supposed to do to keep your information safe. 

Watch your credit card statement closely and report any suspicious charges immediately. The sooner you respond to fraudulent charges, the easier it is to get them settled.

6. Check your credit score before applying for credit.

Many banks have eased their credit standards making it easier for people with so-so credit to get approved. You'll still need to have a great credit score to get approved for the best credit card deals - high rewards, signup bonuses, and long introductory rate periods. Note that you'll get a free credit score if you're not approved for the most ideal credit card terms because of your credit score.

7. Start building an emergency fund.

An emergency fund of three to six months of living expenses should be a part of your finances. Under current job conditions, it's a must have. A sizable emergency fund will supplement any unemployment benefits you receive and help bridge the gap in your income. If you can't build a $20K+ emergency fund right now, focus on setting aside $1,000 to $2,000 to cover minor emergencies. Then, work toward your larger emergency fund goal.

If you've already started an emergency fund, continue contributing to it this year. The larger your fund, the more coverage you'll have if an emergency comes up.

8. Pay your bills on time.

The good news is that credit card issuers can only charge you the greater of your minimum payment or $25 ($35 if you've been late within the past six months) when you're late. The bad news is that two consecutive late payments will increase your APR to the highest penalty rate (often higher than 30%) for six months (unless your credit card doesn't have a penalty rate). Even if you're late just one time, you can lose any promotional interest rate. Honestly, it's easier to pay your accounts on time than it is to get caught up on late payments.

9. Improve your credit score.

The increase in credit card offers is a sign that the credit industry is improving. Credit card issuers are once again mailing out great credit card offers to people who have good credit scores. Improve your credit score, not just to get a great credit card, but also to get better rates on your loans and insurance. If you already have a good credit score, take care to maintain it.

10. Only take out the loans you need.

The more money you borrow, the more you have to pay back. Adding another loan to your monthly expenses puts too much pressure on a budget that's already stretched. You also want to keep your debt as low as possible, especially while the job market is so risky. One less loan will make it easier to make ends meet in an unfortunate job loss.

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