When you see advertisement after advertisement on
television of businesses who want you to find out your “free” credit
score, that is a red flag that someone is looking to make some money off
of you. The funny thing is they are not lying to you but at the same
time, you are exactly right that those companies paying good money for
television advertising are looking to make a buck off of you.
The truth is, you can actually find out what your
credit report says about you. What they are telling you about that is
true. Your credit report tells you your credit score which helps you
understand how creditors see you which is important if you go to get a
new loan. But your credit report also shows a detailed history of your
past use of credit, currently open accounts and anyone who has checked
your credit score in the last year.
This is important information for you because anyone
can check your credit report anytime they want to. And if there are too
many inquiries on your credit report, that itself can drive down your
score. So if you find someone is checking your score too often, you can
take action to put a stop to it.
But there are a couple things they are not telling
you on those advertisements. One is that if you use their services, they
will give you the credit report for free but not the credit score. They
are going to have their hand out for that little tidbit of information.
But the truth that those companies will not tell you is that you can
get that score at least once a year absolutely free if you know how. In
other words, those people hitting you up on television to check your
credit score are relying on the fact that (1) you don’t know how to
check it yourself and (2) you are willing to give them money for
something you can get for free if you know how.
The basic information you should know about credit
reports is that there are three agencies that maintain credit reporting
and they are named Equifax, Experian and Transunion. You can check on
what each of these companies has in their file at any given time. In
addition to a lot of detail about your credit history as we just
discussed, your credit “health” will be represented in the form of a
number of a “score”. That score will run between 300 and 850. The higher
your credit score, the better you will be received by credit
organizations who are deciding whether to extend you a loan.
Once you have this information, you can take action
to improve how you stand on your credit history. First of all, review
the credit detail in depth. You may find accounts still open that you
have not used for years. Close those accounts. If you have a credit
account that is not being used, it is of not value to you, it only runs
down your credit score and there is always a danger someone will use it.
But the next step is to start being “credit smart”
in how you use credit to help see that credit score go up over the next
year. The steps to do that are….
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Always pay your bills on time. Late payments are reported to the credit bureaus and it runs your score down.
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Make more than the minimum payments. If you only pay the minimum on each credit card you owe, that will get noticed by the credit tracking software and make your credit score go down.
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Cut down on the amount of times your credit score is checked. Excessive inquiries into your score indicate that you are looking at getting more credit and that hurts your score.
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Close unneeded credit accounts.
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Start closing some of your credit card accounts once you pay them off.
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Don’t take out any new accounts.
Don’t let yourself get excited by the virtual
nonstop advertising about your credit history. You do not need to know
this information every day. But check it a couple times a year, no
sooner than once every three months to keep tabs on what is going on
with your credit history. It’s the responsible thing to do and you can
just change the channel on those noisy commercials too.
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