Your credit score is one of the most important assets you have. It’s your ability to borrow money. It’s the trust factor you have with lenders. With a low credit score, you’re basically on your own. You have to rely on your own personal savings. That can become rather problematic when you’re trying to start a business or buy a home or even get a car so you can get to work. Protect and cherish your score and it will help you live a good life.
Check Your Credit Report Annually
Every year, you have the option of checking your credit report. It doesn’t cost you a dime. In fact, it could end up saving you money. Sites like annualcreditreport.com give you access to your credit report for free, once per year.
You should take full advantage of this and check to make sure that there are no mistakes on file. Look for derogatory remarks for items that shouldn’t be on there or should be cleared. For example, let’s say you had issues repaying a car loan 5 years ago. You finally came to a settlement agreement, paid off the loan, and had the lender’s written promise to mark the item as “paid as agreed” or “paid in full.” But your credit report shows “settled as agreed.”
The “settled as agreed” remark is considered derogatory. It means that the lender didn’t get what it really wanted, but it decided to settle anyway and take what it could get. If this doesn’t square with the facts, and you can prove that the lender actually agreed to report a non-derogatory comment to the credit bureaus, you have a case for having that derogatory remark removed.
All you have to do is write to the credit bureaus and explain to them that there is erroneous information in your credit report. Attach copies of your proof to the letter, and send it certified mail, return receipt requested.
If there’s a dispute over how a lender or creditor should have reported to the credit bureaus, or if there are debts on there that don’t belong to you (i.e. a past due utility bill that’s actually in another person’s name), then you can successfully dispute these items and have them removed. Doing so will improve your credit score and make it easier to get that loan you want.
Don’t worry about checking your credit report more than once a year. It won’t ding your credit. It’s considered a “soft pull.”
Don’t Apply For Credit Cards Unnecessarily
Let’s say you’re getting a Sioux Falls loan, but you’re also eye-balling this new credit card with cash back rewards. Here’s the thing: unless you need that credit card, you shouldn’t apply for it. Why not? Applying for credit cards requires lenders to a “hard pull.” Too many credit inquiries will lower your credit score and make it look like you’re desperate for money.
If you’re trying to get a loan for a large ticket item, the lender may be dissuaded from giving you the money.
Protect Yourself From Identity Theft
It doesn’t take much to protect yourself from identity theft. Follow a few common-sense rules. First, don’t carry your Social Security card around with you and don’t give your number out to anyone unless you’re applying for government benefits or it’s required by law to disclose it. Don’t carry your birth certificate around with you. If you lose your wallet, report it stolen immediately. File a police report so that anyone using your driver’s license to impersonate you is picked up ASAP.
Cancel all credit and debit cards so the crook can’t spend your money. Lock your mobile phone with a strong, non-dictionary, password (i.e. a password that isn’t in the dictionary, so crooks can’t “brute force” hack your phone with a simple software program). Do the same with your laptop and desktop – lock them with strong pass codes.
Anthony Jensen is a financier. He particularly enjoys writing about personal money management.