 There are three primary rules for credit score tracking. While these are important considerations you may be interested in knowing how your daily decisions affect your credit score.
Knowing this information can help you understand a little better how your credit score should track.
Insufficient Funds Checks
When you write a bad check that information is now placed on your credit report and affects your credit score. This wasn’t always the case, but since it is an indicator of your payment history it has been included. Refuse the urge to write a check that is intended to draw from insufficient funds in your checking account.
What to do with open accounts
If you have an open, but unused credit card you should keep it open if possible. It has only been recently that this observation was offered as advice. In the past it was advised to close the accounts once the bill was paid off. Here’s why this new information is valuable. Your credit score is comprised of several different factors. Two of those are available credit and total length of time you’ve had credit.
So how does that help me?
Let’s say you have a credit card account that was opened 10 years ago and has available credit of $2,000. You may have only used the card once or twice and you paid it back quickly. By keeping the card open your report will show you have access to $2,000 in credit and the sheer length of time the card has been open adds significant history to your credit report. If you cancel the card you lose $2,000 in available credit and you lose a credit source that you’ve had access to for years. The end result is a much younger and less endowed credit portfolio.
Your credit score will always be about history. When you think about taking a department store credit card you should know that a new low limit card like this might actually hurt your credit score. Accept credit only when needed once you’ve actually established solid credit.
Other tips
Some of the best advice you will receive on credit tracking will be to pay down debt and use it sparingly. If you consistently spend more money than you make you will need to alter course by trimming expenses. The easiest way to remember this is to always spend less than you make.
You also need to remember that every time you apply for credit the creditor will access your report. If your report is accessed numerous times in a short period of time you may see a decline in your credit score.
Credit Score Tracking Tips
1. Take advantage of your free annual credit report. This has been mentioned elsewhere on this site, but for reference sake you need to know that the US Government allows each citizen to access his or her credit report once per year at no cost. You can access your report at www.annualcreditreport.com. Those who live in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont also qualify for a state report in addition to the report offered by the federal government.
2. Identity theft requires action. If you have been the target of identity theft you can ask for “Fraud Alert” from credit scoring firms. This allows potential creditors to see that your report may be altered due to issues you did not create. It may also allow you to access additional reports without penalty.
3. Don’t be a compulsive tracker. What I mean by that is that if you check your credit score more frequently than is traditionally acceptable it can be a negative component on your credit report.
It may surprise you, but there are many consumers who have never gained access to their credit report. It is probable there are many incorrect entries on credit reports that go unchallenged because consumers don’t know what’s in their report. In this case ignorance may cost you a much-needed loan.
Track your credit score for an improved financial future.
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