Financial freedom is high on people's list of New Year's resolutions, but according to U.S. News, 80% of Americans will abandon their efforts by mid-February. Change of any kind is difficult without a plan, but it's possible to make big strides in small increments. Consider these tune-ups to improve your credit in 2018.

1. Review your credit reports

One in three Americans has never checked their credit report, according to a Bankrate study, which means that a sizable chunk of the population is making a crucial mistake. The information in your credit reports is used to calculate your credit scores -- those three-digit numbers that help determine whether lenders approve you for new credit and what interest rates they offer you. In some states, employers can even request access to your credit reports during the job interview process, because your credit history is seen as a reflection of your overall reliability. 

There's a lot riding on your creditworthiness. The good news is that you can check your reports from Experian (EXPN 1.34%)Equifax (EFX 1.15%), and TransUnion (TRU 1.30%) for free once a year thanks to the Fair Credit Reporting Act (FCRA). Visit to order a copy of your report from each credit bureau and be sure to review each one carefully. Roughly 79% of all credit reports contained some type of error over a 15-year period, according to the National Association of State Public Interest Research Groups, and 25% of those errors were serious enough to deny consumers access to new credit or loans.

frustrated woman looking at computer

Image source: Getty Images.

It's also important to understand that the credit bureaus are different companies, which means the information found in each of your reports could vary, leading to inaccurate credit scoring along the way. The credit bureaus are required to fix these mistakes within 30 days, so be sure to contact them ASAP -- though fixing the error in your report may take some doing. 

2. See how you're doing in each credit scoring category

After you've reviewed your credit reports for accuracy, it's a good idea to learn how your information and activity are used for credit scoring. While the credit bureaus each have their own methods of scoring, they generally follow a similar formula that weighs usage and activity in the following ways:

  • Payment history (35%): A history of your credit usage allows lenders to grade your level of dependability. It accounts for the largest chunk of your credit score (35%), so it's important to pay your bill on time and avoid risky behavior. A few notable red flags might include late bill payments, collection accounts, judgments, tax liens, and bankruptcies. 
  • Amounts owed (30%): Also known as credit utilization, this category compares your overall debts owed -- e.g., credit card balances, mortgages, auto loans, etc. -- and compares them to your credit limit on an aggregate and individual basis. For example, suppose you have two credit cards, each with a $10,000 limit. Card A has a balance of $5,500 and Card B has a balance of $3,500. Separately, your credit utilizations are 55% and 35%, respectively, and your overall utilization would equal 45%. Lower credit utilization often leads to better credit. In fact, a study by Experian found that consumers with credit scores of 800 or higher used, on average, just 8% of their available credit. Follow their example by keeping your credit balances low. 
  • Credit length (15%): A lengthy credit history is a sign of personal responsibility, and this category looks at the age of your oldest credit account and the average age of all your credit accounts. When it comes to that oldest account, keep it open to maintain a mature credit history that will continue to boost your score over time.
  • New credit (10%): This category is a balancing act of action and restraint. While it's important to open new revolving and installment accounts to keep your report active, too many credit inquiries can lower your scores. For example, suppose you opened three new department store credit cards during the holiday season. The credit bureaus' scoring models might see your recent activity as risky spending behavior, which could cost you a few credit score points in the months ahead. Minimize risk by only applying for credit when you need it, and if you're rate shopping (financing a car, for example), be sure to apply for similar loans within the same 30-day period; then the credit bureaus will count all those inquiries as just one inquiry. 
  • Credit mix (10%): The credit bureaus value experience, so they like to see a mix of different kinds of debt -- credit cards, installment loans, mortgages, etc. Maintaining a mix of revolving and installment debt is a good way to illustrate your understanding of both. Use your credit cards on a regular basis and consider taking out installment loans (e.g., financing a home, car, student tuition, etc.) when it works for your budget.

3. Lower your debts

Easier said than done, right? Nearly half of all Americans carry credit card balances from month to month, according to a recent analysis. That said, there are a few simple ways to supercharge your efforts:

  • Ask for lower interest rates: If your credit is already in decent shape, then your credit card provider may be willing to lower the APR on your balance, making it easier to tackle the principal amount. Contact customer service and ask about their policies. You have nothing to lose.
  • Slash your budget: Eight out of 10 Americans admit to wasting money, according to a study by Hloom, so there's a decent chance that you're not as broke as you feel. Aim to cut 10% from your monthly spending in favor of debt reduction. For example, consider canceling your expensive cable service in exchange for Netflix or Hulu. If your utility bills are skyrocketing, ask your electric company to provide a free energy audit of your home to identify money-wasters. If you have trouble with budgeting, download an app like Mint to help you track spending. You get the idea.
  • Take on a side gig: Whether it's renting out a room in your home on Airbnb or joining the gig economy, earning extra monthly income can help you take control of your debts and improve your credit score in the process.

4. Safeguard your identity

When Equifax announced a massive data breach that affected 143 million Americans, only one in four checked their credit in the following weeks, according to a poll. The information in your credit report can cause serious damage in the wrong hands -- and we're not talking about the kind of basic information that's on your Facebook profile, either. Your credit reports house the most sensitive personal identifiers, including your Social Security number, current and past addresses, account information, and more. Identity thieves can use your credit reports to open new accounts in your name, make purchases with your existing accounts, and even file false tax returns to get their hands on your refund.

You can't afford to ignore the risks of identity theft when your reputation and credit health are at stake. In addition to checking your reports, it's a good idea to sign up for Equifax's free credit monitoring service to safeguard your information (more on that here). While you can't always control who sees your information, you can take a proactive stance.

5. Seek gratification (and savings)

Sticking to a financial goal is tough. In fact, psychologists say goals are easily abandoned when we focus on the downside of failing to reach them. On the other hand, people who focus on smaller goals have a better success rate that those who focus solely on the big picture. Take things slowly and reward yourself to keep your motivation firing on all cylinders. For example:

  • Open a rewards credit card: A high credit score means access to the best credit card perks, and finding rewards that align with your interests is a good way to reinforce your progress. If you're a frequent traveler, for instance, consider signing up for a card that translates everyday purchases into airport lounge access, in-flight benefits, and frequent flyer miles. This strategy allows you to prioritize your goals, save money, and build your credit along the way.
  • Tally your savings: There's nothing more satisfying than money in the bank, and better credit usually translates to more disposable income. Consider tracking your savings and redirecting it. For example, suppose you recently paid off a $2,500 credit card balance that once sucked $150 from your monthly budget. Why not use that freed-up cash to save for retirement? Over 35 years, $150 a month will grow to more than $250,000 at a 7% return.

Your credit may seem like a mystery, but its inner workings are easier to master than you think. Take control in 2018 by learning how to harness credit in your favor.