Pop quiz: What is the one 3 digit number that can make or break you financially? It’s the one number that can determine employment, banking, and many other personal financial issues? You guessed it, it’s your credit score. It is hard to realize that your credit score can dictate if you receive employment or even be damaged if you do not return your library book on time. This 3 digit number can cause you not to be able to receive a good rate on your mortgage loan. Here are some tips that might help you clear up some of those mistakes so you can get started on the journey of repairing your credit.
The most important financial decision you can make is to pay attention to your credit. The first rule of thumb is to take advantage of free credit reports and free financial calculators. This gives you a chance to keep in touch with your credit and know exactly what your credit file is showing. If you live in America, you get 1 free report each year online. The Federal Government implemented this as a means of fighting identity theft. But, it serves so many other good purposes.
Over 25% of reports have errors on them that can keep you from getting an approval. These mistakes are your responsibility to fix. For simple mistakes you can call the bureau. For other more serious mistakes you must follow the steps on your credit file to get them fixed. Do not forget to call the creditor who error has well. You can file disputes on everything from late payments to charge-offs. Once a dispute is filed it is then the lenders responsibility to prove the information within 30-45 days. If they can not verify the information, the credit bureaus must remove them.
There are five factors that determine your score. Bills paid on time, ratio of debt to credit limit, length of credit history, credit applications, and variety of loans.
Remember to always pay your bill on time. Make sure that you do not over exceed your limits. You need to watch out for spending that is not needed. You might want to get rid of those short-lived accounts and keep the long term ones going. Make sure you keep your paperwork in a safe place. Identity theft is very scary. Make sure that you pay attention to your credit so you will not have to struggle within the future. Remember credit is a gift.
Personal finance is a lifelong endeavor that must be monitored and protected. By following a few simple tips and with a little work, your credit score can be the lightning that jumpstarts a successful financial future.