A new year is about to begin.  If you’ve had a struggle with getting your finances in order, it’s never too late to start.  It’s easy to feel trapped and feel like you can’t get out.  But there is always hope.  I don’t proclaim to be an expert when it comes to financial management at all.  I admit I have had my fair share of financial woes like anyone else.  Anything from mismanagement to being unemployed can alter a person’s financial standing.  But the key is to learn how to get out of it and go forward.

While reading an article in the January 2013 issue of Essence Magazine titled, “The Credit Doctor is In”, I thought I’d share a few things from the piece that I think are valuable for anyone.

First of all one of the biggest mistakes, in my opinion, that many women make is not taking the time to really find out what your credit score is.  The first step to taking control of your finances is finding out your credit report.  I know I personally went many years before even realizing that I could request a copy of my credit report.  Now with online access anyone can purchase a copy of their credit report.  But it’s important to make sure it is a legitimate website because you could just as easily be scammed out of your money.

In Canada consumers can contact TransUnion or Equifax to get a copy of their credit report.  In the United States it is Equifax, Experian and TransUnion.  Once you provide the necessary documents to prove you are who you say you are then they will send you a copy of your report.  This is your opportunity to look over what your history is according to your creditors.

There is your credit history (report) and then there is a credit score.  Your report, or history, shows your activity with each creditor.  How often you pay, what the balance is and if it’s revolving credit or not.  Your score (also known as FICO score) is a number that is calculated based on your activity.  According to Forbes.com there are actually five main factors that can determine your credit score.

The following five factors determine your credit score:

1. Payment history
2. Amount you owe on credit lines and loans
3. Length of your credit history
4. Amount of new credit you are applying for
5. Types of accounts you hold

–Source: Forbes.com

Consumers can dispute in writing if there is anything questionable on their reports.  This is a way to combat identity theft and unusual activity in your credit history.  I know someone who learned that a gas bill was taken out in his name and he had no idea.  But there it was on his credit report listed as an unpaid debt.

If you’ve fallen behind each time you are late it is reported to the respective credit bureaus.  Contacting your creditors to make arrangements and making regular payments on your revolving debt are habits that you should take care to manage.  If you’ve been out of work for some time try negotiating with creditors to either reduce your balance owing or lower your interest rates.  Some are willing to be flexible.  After all they would rather get some money than nothing at all.

For 2013, the first thing you should do is get a copy of your credit report and start your road to financial control.

Resources: Forbes.com, Essence Magazine January 2013, The Credit Doctor is In.