5 Things to Remember About Your Credit Status

Your credit history is a key financial chapter of your life. It’s your own financial diary; it tells the story of your relationships with all your financial creditors. Don’t leave it by the wayside, and don’t be surprised when you miss out on a job or loan. Be alert. Be proactive. Understand that in this day and age, to do the things you want to do, knowing the elements of your credit report is vital.

Here are five things you should consider when it comes to your credit. (For related reading, see: 5 Steps to Build Wealth and Grow It Over Time.)

Your Credit History

Your credit history usually includes your credit cards, loans, bills, public judgments 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. There are many moving parts. Take the time to know where you stand with each creditor.

Why Your Credit Matters

Your credit is 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. One of the most important variables a lender uses to makes this decision is your credit report. This will heavily influence the interest rate you’ll receive. The creditor is making an assessment on your ability to repay the loan. You definitely want to be a good bet.

Your Credit Report

Take the time to visit www.annualcreditreport.com. Pull your report. Do it annually. Make sure everything is accurate. If it is not, dispute it. A creditor could have made a mistake and reported inaccurate information. Stay on top of this. Understand that 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 a free annual credit report. My recommendation: Reward yourself by requesting your credit report on your birthday. (For more, see: 5 Ways to Become Financially Savvy.)

Who Compiles Credit Reports

Three companies deal with consumer credit: Experian, Transunion and Equifax. The information from each is similar but not consistent. Check all three companies and order reports from each one.

Be Diligent in Reviewing Credit

There are currently more than 15 million American victims of identity theft. As a crime, it’s rampant. Watch for phishing scams in your email,  especially if the email asks you to log in. If you’re not sure, call the company or visit the company’s website independent from the email. Review your report for inquiries that are out of line of your normal credit history. Make sure all the credit on the report is a credit line or loan that you opened and are responsible for.

Along this line, be ahead of the game by checking transactions on your credit card on a consistent basis. Be on top of this. If anything seems out of line, make a call. Additionally, if you receive unexpected mail from a lender, follow-up with the company and check your credit report. Be attentive. Keep your eyes open. (For related reading, see: Identity Theft: How to Avoid It.)