When you're writing out your New Year's resolutions this year, why not add "improve my credit score" to your list?  By including a resolution to improve your personal financial literacy, you will not only be boosting your credit score, but will also be putting yourself in a much stronger financial position when it comes to getting better rates on future credit and helping you buy a home.  Follow these small steps below to get you started on your way:

1)      Be proactive, start with reviewing your free credit report to better understand your credit standing. You're entitled to free credit reports from Canada’s two credit-reporting agencies TransUnion and Equifax.  

2)      When checking your credit report, look at EVERYTHING.  Errors made by retailers, phone companies or banks can impact your credit score and may cost you money in higher interest payments.  

3)      Take care of any debt in collections and pay off any negative items on your credit history first as they will have a negative impact on your credit score.

4)      Don't let bills pile up; past due bills can incur late fees and will negatively affect your credit score.  Your payment history is the most important factor for your credit score and accounts for about 35%.  Being prompt and making payments on time will be reflected in your score.

5)      Check credit card bills closely for errors and signs of potential identity theft.

6)      Amounts owed or use of available credit is the 2^nd most important factor in your credit score.  To determine your available credit, add up the credit limits for all accounts including credit cards, loans and lines of credit.  What counts towards your credit score is how much of that available credit you actually use.  When you are using a large percentage of your available credit, even if you pay it off every month, a lender sees you as a greater risk.  Try to use less than 35% of your available credit to improve your debt-to-credit ratio.

7)      Keep up your responsible credit card habits.  Going over a credit limit will seriously impact your score by approximately 50 points!

Once you have taken the steps above to improve your credit score, keep it as high as possible.  A good strategy like improving your financial literacy is a positive start to the new year and it will make it easier to obtain favorable lending terms in the future.