Are your credit habits ready for a New Year’s resolution? If you’re like many Americans, you may be able to improve your credit health and even your finances by changing a few of your credit practices. Here are five bad credit habits to break in 2021.

1. Ignoring your spending statements

Reviewing your monthly credit card, debit card and bank account statements may not sound like your idea of fun, but it’s an important step for staying on top of your financial wellbeing. Regularly checking your credit statements makes it easier to catch accidental or fraudulent charges that might otherwise go unnoticed. Set aside a time each month to check your statements – or follow your spending habits with a popular budgeting app – to make sure everything is in order with your accounts. This could save you from a major expense or damage to your credit.

2. Missing payments or making them late

From forgetfulness to financial challenges, there are many reasons why late or missed credit card payments occur. Unfortunately, failing to make timely payments can cost you in fees and do damage to your credit scores. The biggest solution for forgetfulness is to set up automatic payments or schedule payments days in advance – just make sure you maintain a sufficient bank balance to cover your payments. While they are few simple solutions if you’re struggling to afford your payments, creating and following a budget and reaching out to your credit card company for options may help you avoid the consequences of late or missed payments.

3. Carrying large credit card balances

Maintaining large balances on your credit cards can lead to growing interest charges and debt, and it can also harm your credit scores. Protect your scores by keeping your combined balance across all credit cards below 30% of your combined credit limit. For example, if you have one credit card with a $10,000 limit and one with a $5,000 limit, you’ll want to avoid carrying a total of $4,500 or more on both cards ($10,000 + $5,000 = $15,000, and $15,000 x 0.30 = $4,500). To avoid paying interest charges and taking on new debt, strive to pay off your credit card statement balances completely by each due date.

4. Carelessly opening or cancelling credit

Sometimes, you need a new line of credit or loan. Sometimes, it’s right to close one out. But each action comes with benefits and consequences, including an impact on your credit scores. Having a variety of credit accounts open helps your credit scores in the long run, but opening new accounts can harm your scores a bit in the short term, and closing old accounts can weaken your scores. If you’re planning to finance a home purchase or refinance a mortgage within a year or so, consult with a mortgage professional before making any credit decisions like these.

5. Neglecting your credit reports

The contents of your credit reports determine your credit scores and impact what kind of credit is available to you. If mistakes find their way into your reports, they can sabotage your credit, potentially costing you money and hindering plans like a home purchase. Click here to learn more about the importance of checking your credit reports and how you can do so once a year for free.


Savvy use of credit can save you money and accelerate your progress toward your financial goals. By ditching any or all these bad habits you may have, you can help ensure that credit will be a tool rather than a burden to you in 2021. If you have credit card balances you’re ready to ditch, get in touch to find out if you could consolidate your debt with a mortgage refinance at today’s low rates.