These days it seems like offers to review your credit history show up in your email inbox by the hundreds. The emails are typically offering a chance to review your credit report for free, but are really interested in getting readers to purchase a credit security program. These programs will alert subscribers when a change is made to, or a review is requested of, their reports. While it may be helpful to be aware of your credit report, a few simple steps can be taken to avoid paying a fee to have your credit monitored.
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First, it is important to understand why your
credit report is important. Anytime you wish to borrow money, your
credit report is viewed by the lender. When you apply for a car loan, a mortgage, or a credit card, the lender will review your credit before offering you the loan. The
credit score will also effect the interest rate at which the money can be borrowed. Essentially, your credit score determines how expensive money is for you.
Your credit score is determined by a variety of factors, including how much debt you have, how timely you are with repayment of current loans, and how your income compares to your debt. Creditors will also look at how much credit experience you have. For instance, someone that has a car loan, mortgage, and one revolving credit account, paid on time each month, stands a better chance of getting a loan than someone that rents an apartment, bought their car with cash, and does not have any credit cards. Some may view this as unfair, but the creditors are looking to lend to people with proven track records.
It is important to review your
credit report annually, if not more frequently. Everyone is entitled to one copy of their annual credit report from the three major
credit reporting agencies. These agencies are Experian, Transunion, and Equifax. Occasionally, someone may spot an error on their
credit report, which is why it is important to request a copy of your annual credit report from each of the three companies. An error may arise with one company that is not an issue with the others. If you find an error, review the dispute procedure for that particular company and follow through. Removing errors can be time consuming, but are worth the effort.
If you have been a victim of identity theft, or you have had personal belongings stolen, you can request that the
credit reporting agencies contact you for three months after the event when a credit review is requested. This means that if someone is applying for credit in your name, the company will not give access to your report until you have verbally acknowledged the request. This is a safety precaution that allows you to be aware of any fraudulent crime being committed in your name.
There are a number of credit scams in existence, and if you are ever skeptical of a situation, it is better to wait than to be taken advantage of. There are no reputable companies that will ask you for security information over the phone or by email, ever. This means that any request you get for your password or log-in information is from a criminal. Reputable companies go out of their way to protect your credit information, so walk away if you suspect anything is wrong. You can also do research through the Better Business Bureau if you have a question concerning a company's integrity.
Many stores are in the business of selling their commercial credit cards. It will not effect your credit much if you have a credit card with one or two of your favorite shopping establishments. However, if you take advantage of every credit offer, in order to receive a percentage off of your purchase, your credit will suffer in the long-run. Plus, you put yourself at risk for using these
credit cards if you do not have the cash. If you have several store credit cards, you are basically walking around with a wallet full of risk. Store cards often have very high interest rates, as well. So if you are saving 10% off your purchase, it may cost you 20% or more to pay the money back to the company, not saving you at all! It is best to pare down your commercial credit to one major credit card. Try to find a card that offers a reward of some sort for its use, so you get a bonus every time you use the card. If you can, save it for emergencies only, or pay off the balance in full each month.
If you have experienced hardship and your
credit score reflects this, there are straightforward ways to improve your credit score. It may not be easy, but it can be done. Be sure to pay your bills on time. Typically, if a bill is more than thirty days late, the lender will report this to the three
credit reporting agencies. In addition to paying your bills on time, try to pay more than the minimum payment on loans. If you can, pay the amount in its entirety each month, or pay the loan off. Do not fill out credit applications, as this has a negative effect on your score. Many people fall into the trap of applying for credit they do not plan to use, sometimes to receive a free gift. Ask yourself if the item is really worth risking a lower credit score, and effecting your purchasing power in the future. Lastly, be sure to keep an eye on your annual credit report. The last thing someone that is trying to repair their credit score needs is a criminal abusing their credit. Credit is important for anyone planning to borrow money in the future, but with some conscientious maintenance, it is easy to maintain.