5 Reasons To Take Better Care Of Your Credit Score
Written by Dave Chrisman - Thursday, 15 January 2009
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If you’re like me you have often wondered what creditors see when they research your credit score. The reason you may wonder is you hear about all those places where you’re supposed to be able to get a free copy of your credit report.
If it’s really free why do they want your credit card number?
Let me provide a little tip before we go any further. There is only one online location that will actually provide a free copy of your credit report. The truth is credit reporting agencies are mandated by the federal government to provide Americans with one free report each year. The trouble is while it’s the law there are multiple other companies that advertise a free report, but offer paid alternatives that often confuse customers. So, if you want to take a look at your free report just fill out the information at www.annualcreditreport.com. You can also contact them toll free at 1-877-322-8228.
It is possible you have never seen your credit report. There are some pretty compelling reasons to know what’s in that report. Let’s take a look at five persuasive reasons to view your credit report and how this information could help you make your credit history more attractive to lenders.
Open Accounts.
It is possible you have paid off a credit card or other line of credit and haven’t used that piece of plastic in months or even years. More than likely you forgot to closed these accounts. Creditors will still see open accounts. When they see too many open accounts it could result in a negative view with regards to potential lending. Find those old accounts in your credit report and get them closed.
Wrong Information.
It is possible there is information in your credit report that is incorrect. You can’t begin the process of asking for corrections if you don’t know what’s in the report. Creditors will see wrong information as accurate unless you work to fix the mistakes.
Getting Historical.
By reviewing your credit report you can see what kind of track record you have had in making credit payments on time. When creditors see chronic late or missing payments they are less inclined to extend a lending hand. This can be the encouragement you need to manage your monthly finances better. There may even be several small loans you can work at eliminating in order to improve your score.
Know The Score.
Your credit rating could be higher or lower than you thought. By getting your free annual report you will be able to more accurately project the potential of getting that next loan. In some cases this can mean avoiding the embarrassment of a rejected loan application.
Exercise Plan.
By learning an appropriate balance of debt and repayment you may be surprised how helpful it can be to your credit score. For instance if you have used cash to pay for the majority of purchases you may find you have a low credit score. The emphasis in these reports is the word ‘credit’. The three main credit agencies have no relevant background to project your risk because you have not used credit or used it very sparingly. By not using credit these companies have no way of knowing how well you might repay your loan. It may be worthwhile to maintain some regular line of credit and also have accounts that have been paid in full and then closed.
Credit and Cholesterol?
Many know what it’s like to get their cholesterol checked on an annual basis. Getting an up close and personal look at your credit rating can provide similar information about a different potential problem. By knowing where you stand in issues of credit you can devise the best battle plan for improving the overall health of your score by the time you check your score again next year.
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