Want to enhance your finances in the New Year? Practicing better credit habits should be a key part of your strategy. Responsible use of credit is reflected on your credit report and affects how creditors view your ability to effectively manage debt.

Any financial wellness plan for the new year should include a credit plan. Here are five ways to make smarter credit decisions in the New Year.

1. Pay Your Bills on Time

There are many obvious benefits to paying your bills on time. Making timely payments will keep your accounts in good standing, avoid getting services shut off and help you maintain good relationships with your service providers. But paying bills on time also protects your credit from the negative effects of late payments. Once a bill is 30 days late or more, it can land on your credit report and do significant damage to your credit score.

If you think you’re at risk of making a late payment, call the vendor before you’re late. They might be willing to work out an alternative payment plan or temporarily negotiate a lower payment.

2. Maintain Low Credit Card Balances

Having a high credit utilization ratio, such as when your credit cards are close to the limit, is bad for your credit. It also means you have higher minimum payments, you pay more in interest from month to month and it’s going to be more difficult to get out from under your credit card debt.

Try to keep your balance low. Ideally, the best way to use a credit card is to pay off your balance in full each month – that way you’ll completely avoid excessive debt, high balances and interest charges.

3. Pay Off Existing Debt

When you have a lot of debt, too much of your budget may be allocated to debt payments. Too much debt can be bad for your credit and finances in many ways. If you feel your debt is becoming unmanageable (or you just want to pay it down faster), putting together a debt repayment plan for the New Year should be a priority.

4. Check Your Credit Report

Checking your credit report and continuous monitoring that alerts you whenever a change occurs should be an essential part of your financial wellness plan. You don’t want to be surprised by inaccurate information the next time you submit a credit application. Inaccurate information could even be a sign of identity theft. Make sure you know what’s in your credit report in the New Year.

5. Increase Your Credit Intelligence

Consumer knowledge of credit scores has been on a steady decline since 2012. If you don’t understand how credit works, you can’t effectively manage your credit to the best of your ability. Increasing your financial literacy and credit intelligence can help you make smarter choices in the New Year.