It’s the end of the year. You’re shopping. You may be fixing up the house because relatives are visiting. You’re eating out with friends. Your credit and debit cards are working overtime. Be aware. Be a monitor of your credit. Here are five things you need to know.
- What composes your credit history? It usually includes your credit cards, loans, bills, public judgements, and credit inquiries. Your history comprises the amount of credit you have outstanding, how much you owe, and whether or not you pay your bills on time.
- Why should you care about your credit? Your credit is your key to getting the best deal possible for additional credit. Do you want the best possible interest rate on a loan for your car or home? Do you want that new job? Do you want good rates on your insurance? Your credit history indicates whether or not you are a good risk. All lending decisions are based on this history. Lenders want to know if you will be a good borrower: will you repay the loan?
- Monitor your credit report. Do go to www.annualcreditreport.com. Request your report. Do it annually. Make sure everything in the report is accurate. If it is not, dispute it. A creditor might have made a mistake and reported inaccurate information. Basically, you are responsible for the information in the report. This is your financial story; your biography. Under the Fair and Accurate Credit Transactions Act, you are entitled to one credit report at no charge every year.
- Who compiles these credit reports? Three companies: Experian, Transunion and Equifax. The information is similar across the three companies, but not consistent. Check with all three companies and order reports from each one.
- Be diligent. There are currently more than 15 million Americans who are victims of identity theft. As a crime, it’s rampant. Watch in particular for phishing scams in your email — especially if the email asks you to click a link to log in to a website. If you’re not sure about the email, call the company or visit their website without clicking the email link. Also look through your credit report for any inquiries that are out of line of your normal credit history. Make sure that all the credit on the report is a credit line or loan that you opened and are responsible for.