The Benefits of Understanding Your Credit Report and Score

It is financially responsible to know your credit score and to know exactly what details are in your credit report.

One month ago I received a letter in the mail from my credit card company. It politely notified me that my recent credit card application did not match my current address listed on my account.

The problem was that because I was committed to staying out of credit card debt, I hadn’t filled out a credit card application in over two years!

I immediately called the number listed in the letter and found out that someone in California was trying to open a credit card in my name (I live in Texas). Yikes! This was the first hint of identity theft that I had ever been a part of. Needless to say it was unnerving.

I called the credit bureau immediately, notified them about the situation, and put a customer fraud alert on my credit report. The fraud alert stops any and all credit applications from being processed for 90 days (or until verified by me).

Keely, the fraud specialist who became my new best friend, recommended that I get a copy of my credit report to make sure no other unfamiliar credit inquiries had been made. Thank you Keely! I found out there were 2 other credit inquiries on my report due to 2 other fraudulent credit card applications!!

I quickly contacted those companies and halted the application process. In about 3 days, the crisis was over. (I consider myself extremely lucky because identity theft doesn’t always end this quickly or quietly)

[Disclaimer: I am not using scare tactics to motivate you to action like so many financial commercials. I am simply sharing my experience in hopes that you might learn from my misfortune]

Reading and Understanding Your Credit Report

I began to read through my full credit report and noticed a few other things that needed to be dealt with. I found a few inquiries that were doubled up and I found a few remarks about 30-day and 60-day late payments that were incorrect.

I called Keely at TransUnion (I still had her extension) and she directed me to inform TransUnion about all of the incorrect items I had discovered. It turns out that I didn’t need to hire a credit repair company.

I simply informed TransUnion about the incorrect inquiries and remarks and within three weeks every wrong item was removed. My credit score jumped 22 points as a result.

Why is Understanding Your Credit Report so Beneficial?

• You will know first-hand exactly what information is listed on your report.
• You’ll know what the creditors know, and you will be prepared against credit bullies who try to belittle your financial situation.
• You will see any negative remarks and therefore have an opportunity to fix the cause before it hurts your score too badly. If you don’t know about the negative stuff, then how can you try to fix it?
• You will have the upper hand against fraudulent inquiries, and you will be better guarded against identity theft.
• Other people make mistakes from time to time. Reading your credit report will allow you to make sure all the information listed on your report is current and accurate.

Understanding Your Credit Score

No one wants to be in the loan office of a car dealership when they find out their credit score is below average. But most consumers are still caught off guard when it comes to knowing their magical 3-digit number.

A high credit score will usually get you a better chance at loan acceptance and a lower interest rate. A low score, however, might cause a house to become too expensive for you to afford, even in this era of low housing prices.

Or worse yet, a low credit score might stop your purchase in its tracks because the company you’re dealing with decides not to take a risk on you. Fair or not, that’s how the credit game works.

If you know your credit score before you enter the negotiation arena (and it’s a Good to Excellent score), you stand a better chance at coming out ahead. If you find out your credit score is in bad shape, you can spend the next 6-12 months repairing your credit.

Good credit has the potential of saving you thousands of dollars in interest.

Boosting Your Credit Score

If you pay off your credit card balance every month, you’re definitely displaying wisdom and financial responsibility. But there are a few other ways to improve your credit score:

• Pay your bills before the due date – if you pay your balance before the end of the cycle, you can lower your utilization rate.
• Make multiple payments on your credit cards – this helps pay down your balance quicker and you use less of your overall available credit
• Request a Goodwill Deletion – you might get one or two slightly negative remarks expunged from your record if your credit history is otherwise good.

Whether you are fighting identify theft or just making sure your info is accurate, becoming familiar with your credit report and credit score will be of great benefit. Being proactive about your credit history will put you in charge of your most important information.

Continue to educate yourself on credit safety and debt reduction. The more you know, you more stable your financial future will become.