The start of a new year is quickly approaching. Maybe you’re making goals or resolutions to improve your life in 2010. Maybe some of those goals include improving your financial situation. Are you really prepared to do that? If you haven’t checked your credit history lately, you’re probably not.

Why You Should Check Your Credit File Before the New Year

It’s impossible to set realistic and achievable goals if you don’t know your starting situation. If you want to improve your financial situation, you need a full picture of what your current financial situation really is. Your credit file helps paint that picture.

What You Can Learn From Your Credit File

Your credit file is full of useful information about your financial status and credit history. Some of the things you should take note of include:

• Open credit accounts — you might have forgotten about one that you’d like to close
• Employment information — make sure it’s up to date (outdated info could affect your ability to get future credit)
• Defaults – if you have defaults on your credit file, these are the accounts your New Year’s resolutions should probably address first
• Payment histories — make sure paid off defaults or debts are marked as such so you don’t appear to have more debt than you really do

Once you’re armed with that basic information about your credit history, you can use it to help you choose financial New Year’s resolutions.

Setting Goals Based on Information in Your Credit File

The first thing you should do with your credit file information is make sure everything is accurate. If there are errors, report them to have them corrected as soon as possible. If you find open credit accounts listed that you never applied for, it could be a sign that you’re a victim of identity theft / credit card fraud, so immediately contact the credit bureaus (Veda Advantage and Dun & Bradstreet) as well as the creditor in question.

Your credit file will also help you set goals regarding paying down debt. For example, if you have credit card debt that you can’t afford to pay off quickly, you might opt for a balance transfer (with a balance transfer card like the ANZ Low Rate MasterCard) to at least save money on interest while you pay off the debt more slowly.

While correcting errors in your credit history and figuring out a debt reduction plan are probably the two most common financial goals you’ll make after reviewing your credit file, it can help in other ways too. For example, you’ll see how many enquiries are on your account (which might be a sign to stop applying for new credit cards if you’ve been rejected) or you might realize that your income really isn’t enough to cover your debt (leading to a New Year’s resolution of finding a better, higher-paying job). No matter what your financial goals are for 2010, your credit file gives you a great place to start.