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Now that we’re a few weeks into 2023 and your new year’s resolutions are already starting to seem like more trouble than they’re worth, may I suggest a pivot to a different resolution? Make this the year you maximize your credit score. It’s not difficult and it can have big payoffs.

If you plan to buy anything that requires a loan (a house, a car, a business), a great credit score can help assure your success, since this is what lenders use to determine whether or not to make the loan, how much to lend, and the cost of the loan. Credit scores range from 350 to 850—the higher, the better. Most lenders will entertain the idea of giving you a loan if your score is above 550.

The easiest way to know your score is via the free credit-monitoring service Credit Karma (creditkarma.com). Credit Karma’s score isn’t identical to those from the credit-reporting companies (they protect their formula to prevent people from gaming the system to raise their scores). However, the basic things you can do to raise your score are well known, although sometimes counterintuitive.

The credit scoring process is designed to benefit lenders. They want to know if you are a good risk, as measured by factors like whether you pay your debts as promised and if you have already maxed out your available credit.

So, while paying off your loans (including credit cards) is a great idea, closing those accounts afterwards is not—unless the temptation of owning a credit card is dangerous for you. Leaving revolving accounts open affects the calculation of available credit. Only using 5 percent of your available credit raises your score. Using 95 percent of your available credit lowers your score. Also, lenders want to see how you do over time. A credit card you’ve had for ten years gives you a higher score than a card you’ve only had for ten months.

No matter how bad your credit is today, ultimately, it is within your power to fix it by paying down debt, making payments on time, and being responsible with your use of credit. Late charges and negative comments will follow you for up to seven years, as will a bankruptcy, but they won’t follow you forever.

If you find a mistake on your credit report, don’t let it slide. Call the credit reporting agency or vendor with the mistake and correct it. It could have been misunderstanding—or it could be fraud. If someone starts using your credit card number or if you become the victim of identity theft and someone opens accounts in your name, it will definitely hurt your credit score. If you catch it quickly, you can repair the damage and prevent further damage.

If you are struggling to make payments, talk to your creditor or landlord before a payment becomes overdue. See if you can work something out before they report you. That will keep it off your credit record and help with your relationship with the landlord for future recommendations.

In addition to providing a credit score and making you aware of any credit problems, Credit Karma also recommends ways to improve your score. As with other “free” services, if you are not paying for a product, you are the product. Credit Karma will offer to sell you financial services, including credit cards. If you don’t need another card, don’t open another account.

If you receive an offer to consolidate outstanding balances from multiple accounts in exchange for a lower monthly payment, be careful that you are not simply extending the overall time it takes to pay off your debt (which would probably include extra fees and/or interest payments). Also be sure to check that you are not simply moving from one credit card to another with no additional benefits.

If you are shopping for credit, be aware that the more reports pulled to verify your credit score, the more your score will drop. So, before you allow a creditor to pull your report, be sure this is where you want credit. (This is not true for Credit Karma—you can check there as often as you like.)

Ideally, if you pay down debt, make payments on time, and are responsible with credit, your score will look different when it’s time to make new year’s resolutions for 2024.

If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.

Dick Selzer is a real estate broker who has been in the business for more than 45 years.