Fresh Start: How to Rebuild or Improve Your Credit in the New Year

A new year is the perfect time to take control of your financial future and your credit score is one of the most powerful tools you have. Whether you're working to rebuild after financial setbacks or simply want to strengthen your credit for upcoming goals like a car, home, or personal loan, small steps can create big results. Here’s how to start the year with stronger credit and a fresh, confident financial outlook.

Know Where Your Credit Stands

Start by reviewing your credit report from all three major bureaus. Look for:

• Incorrect balances

• Outdated accounts

• Fraudulent activity

• Duplicate listings

Understanding your credit history gives you a clear starting point. Our Financial Empowerment Tools can help you better understand how credit scores work and how different factors affect your rating.

Build Positive Payment History

On-time payments are the single most important factor in your credit score. Set up:

• Payment reminders

• Automatic payments

• Alerts for due dates

Whether you’re paying a loan, card, or utility bill, consistency matters.

Lower Your Credit Utilization

Your credit utilization, how much of your available credit you're using, plays a major role in your score. Ideally, you want to keep balances below 30% of your total credit limit.

If your balances are higher than you'd like, consider strategies like:

• Paying down your smallest balance first for quick wins

• Using tax refunds or bonuses toward credit card debt

• Avoiding new purchases while you focus on reducing existing balances

Use the Credit Builder Loan

If you’re starting from scratch or rebuilding, a Credit Builder Loan is a powerful tool. It helps you:

1. Build positive payment history

2. Grow savings at the same time

3. Establish credit safely and responsibly

At the end of the loan term, your payments return to you, making it both a savings tool and a credit-building tool.

Avoid Opening Multiple Accounts at Once

Every time you apply for new credit, a hard inquiry is added to your report, which can temporarily lower your score. Applying too frequently can signal financial stress to lenders.

Only apply for new credit when it serves a clear purpose - like securing a lower interest rate or refinancing at better terms. Review rates online first to determine whether applying makes sense for your credit goals.

Practice Long-Term Consistency

Credit improvement takes time, but steady habits always pay off. Celebrate small wins like a lower balance, a higher score, or fewer monthly payments, because they all move you toward financial freedom.

Rebuilding or improving your credit doesn’t happen overnight, but with steady habits and responsible borrowing you can make meaningful progress this year. No matter where you're starting from, every positive step brings you closer to stronger financial health and the freedom that comes with a great credit score. If you’re looking for help, please stop by any of our convenient branch locations or call 248-322-9800 extension 5 to speak with a team member today. 

 

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