Clean up your finances like your home
Spring cleaning usually means organizing closets and clearing out clutter. Financial experts say it can also be the perfect moment to tidy up your credit and overall money habits.
Cynthia Chen, founder and CEO of Kikoff, a personal finance platform focused on credit building and debt reduction, believes this season offers a strategic opportunity. With many Americans receiving tax refunds, she says it is a practical time to review finances and make intentional decisions about debt and credit improvement.
Use tax refunds strategically
Rather than spending a refund impulsively, Chen recommends allocating part of it toward improving your credit profile. Paying off or reducing credit card balances can lower your utilization rate, which plays a significant role in credit score calculations. Ideally, utilization should remain below 30% of your available credit.
Refund money can also be used to resolve collection accounts, helping to clean up negative items on a credit report. Addressing these issues early in the year may position consumers for stronger approval odds later, whether for travel rewards cards or major purchases.
Create a debt reduction plan
High-interest debt, especially credit card balances, should be a priority. Making payments above the minimum and paying early when possible can reduce interest costs over time. According to American Express data, the average American carries between $5,300 and $6,700 in credit card debt, making proactive repayment strategies increasingly important.
Review your credit reports carefully
Chen advises conducting a full credit health check by reviewing reports from Equifax, Experian, and TransUnion. Each bureau may show slightly different information, depending on which lenders report to them.
Consumers should verify that payment histories, balances, and account statuses are accurate. Errors, such as incorrectly reported late payments or unfamiliar accounts, can be disputed directly with the credit bureau. Carefully auditing each line item ensures your credit profile reflects accurate information.
Be strategic with new credit applications
Applying for a credit card triggers a hard inquiry, which can temporarily lower your score by a few points. If you plan to apply for a mortgage soon, avoid opening new credit accounts that could affect your approval odds.
When using credit cards, only charge what you can afford to pay in full each month. Consistent on-time payments and responsible usage are key to long-term credit health.
Think twice before closing old accounts
Keeping older accounts open can strengthen your credit score by increasing your average account age. A long-standing account in good standing demonstrates a history of responsible payment behavior.
If a credit card has no annual fee and remains in good standing, maintaining it may benefit your credit profile. Closing accounts unnecessarily can shorten your credit history and potentially lower your score.