It’s MARCH!! Whoop Whoop!! Spring is right around the corner. Time to open up those windows and let the fresh air in. It’s also time to open up those credit reports and start doing some cleaning! I pull my credit reports once a year (which is free just click here) just to keep an eye on what is being reported. I find a great time of year to do it is around tax time, finances are on the forefront of my mind and so are my long term goals. It is important no matter your situation, married, single, divorced, widowed, to know what is on your credit reports. It can mean the difference of hundreds to tens of thousands of dollars in interest when getting approved for loans. Even if you don’t have intention of buying a home or a car or getting a credit card the information on your credit report is vital. What is reported on your credit report?
- Address History
- Credit Card History
- Auto Loans History
- Mortgage History
- Bankruptcy (if applicable)
- Collections (Medical, Utilities, Cable, etc.)
- Tax Liens
- Child Support Arrears
- Identity Theft
Once you get your reports (make sure you get them from all three bureaus, Transunion, Experian, Equifax) go through each line. It will show all the positive in one section and all the negative in one section and then the judgments and liens at the end. If you find errors on your credit report make note of it. I like to use a spiral notebook (it’s cathartic) and list the name of the bureau and all information listed that you believe is in error. Once I’ve done this for all three bureaus I get back to the computer. Go to each site individually, and search dispute an error. Follow their directions on disputing the information. Sometimes you can do it online (so quick and easy) other times you need to send a written letter (takes a little more time, but boy it’s worth it). Create a form letter and simply change out the item and don’t forget to save a copy for your records.
Credit bureaus are required under law to investigate your claims within 30 days (it is sometimes less than that) and then send you written notification of their results of the investigation. Keep the credit report, the dispute documentation and the notification letters for your records.
Keep in mind that just because the information maybe negative if it is true you cannot dispute it. Negative information that is accurate can remain on your credit report for seven years and bankruptcy can stay for 10 years.
This process takes time and effort, but the savings are very much worth it. Disputing errors can help raise your credit score and lower your interest rate.
Other factors that can affect your credit:
- Amount Owed
- Payment History
- Length of Credit History
- New Credit Inquiries and Combination of Accounts
Amount owed and payment history are the two biggest factors here. Do your best to keep your credit at 30% of the max limit on each card/account. When making payments pay a little more than the minimum payment even $5-$10 shows kudos to anyone looking to lend you money. Always pay on time. I’ve had problems in the past where life happens (okay well self-employed life when clients don’t pay on time). It’s okay! Just make sure you make a payment (which will most likely include a late fee) before the next due date. If you wait it will become 30 days late and you don’t want that, it will be reported on your credit report and impact your FICO score.
Length of credit history is important as well. This means when you pay off a card (Yay!) don’t close it! Cut it up if you want, vow to never use it again, but do not close the account. Keep it open to establish and longer credit history. This can potentially increase your FICO score by 15%.
New inquiries and the mix of credit sources will affect your FICO by 10% each. If you see someone pulling your credit constantly – some banks do this to send you offers or it could be an indicator of fraud. Try to do your research and contact the credit bureaus and put a block on those companies. If this is fraud you need to file a police report and submit it to each of the credit bureaus. If you are trying to improve your score do not apply for more credit. It does not make that much difference in your score, but every little bit helps.
As I said before, everyone, man or woman, married, single, divorced or widowed needs to be responsible for their own financial situation. I have met many a woman in marriages that have no idea of their financial situation. Only to find out later that there were loans being taken out in their name they didn’t even know of. Don’t be a victim to a poor credit report. Let’s get proactive and dig into our financials. It really could save you in the long run.
Do you pull your reports annually? How have you found ways to improve your FICO score or credit report? Let me know and maybe I will write a future post about it.