The Importance of Monitoring Your Credit Score
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Far too many people wait until they’re at the mid-point of their life, ready to buy a house or take out a business loan to really explore their credit score. Unfortunately for many of them, by then they’ve accumulated enough negative entries that it makes getting credit difficult. The better approach is to learn, while you’re still young, to check your credit score regularly.
There’s really no excuse any more to remain ignorant about what your credit report says about you (or more precisely, credit reports, since there are three major credit-reporting agencies). In September, 2005, Congress passed the Fair and Accurate Credit Transactions Act. Because of that new legislation, you now have a right to get a free copy of your credit reports each year, from Equifax, Experian and Trans-Union.
The easiest way to check these reports is online. And no, don’t waste your money on those companies that advertise repeatedly on television promising a “free” report (usually only free if you subscribe to some service they offer). Insetad, visit the truly-free site set up by the credit report agencies themselves: www.annualcreditreport.com.
Once you’ve pulled up the reports, print them out so you can study them closely. Check personal details: name, address, Social Security number, etc. Many people have found that they’ve been mistaken for the wrong person, and their score has suffered for it.
Second, check what they say about payments you’ve made. If there is a purchase that you are positive you didn’t make, it’s possible that this was either a mistake or that you were the victim of identity theft. Contact the agency immediately. Once you do, it is their obligation to investigate, and either confirm that this was indeed you, or else remove the reference from your report.
But don’t just focus on wrong entries; look at the ones that are accurate as well. Maybe there was an instance where, one time, you were late making, but otherwise, you were faithful with the payments. In these cases, call the creditor. For their good customers, most of these companies will ask that these references be removed if you just ask them.
Finally, look at the references that are accurate and that cannot be removed. Think about what circumstances led to this event–and learn from the experience. To preserve as much of your reputation as possible, commit to not being the victim of those circumstances again. The result of this approach will be that, in the future, you’re not as likely to be caught off guard by someone who refuses to give you a loan or extend to you credit.
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