In the past we have discussed a variety of issues surrounding your credit score, credit reports, and how these areas might affect your estate and financial planning efforts. This week we wanted to give you some additional practical advice about your credit score, including steps on how to protect your score so that it stays healthy. While not all of these methods may be necessary for all people, we want you to know what steps are available so that you can have the information you need to make the proper choices.
Protecting Your Credit Score: Payments
To ensure that your credit score stays healthy, one of the best things you can do is to keep on making regular, timely payments every month. The single greatest factor that makes up your credit score is your history of timely payments. Making sure you pay every month is the simplest, best way to keep your score strong.
One practical way to make sure that you don’t miss any payments is to pay all of your bills on the same day every month. If you currently have a variety of bills that are due on different dates, you might be able to reschedule monthly payments so that all of your payments fall on the same day. Of course, this will require you to make sure you have enough money available to make payments on the same date every month, but with a little planning ahead this should be relatively easy to do.
Protecting Your Credit Score: Reviewing Your Credit Report
Another vital step in keeping your credit score healthy is reviewing your credit reports every year for errors, mistakes, or even signs of financial fraud. Your credit report lists all the information creditors used to determine your score, and it’s fairly common for these reports to contain at least one mistake. While many of these mistakes are relatively benign, some mistakes can be serious, and can lead to a reduction in your score. In the worst case scenario, your credit report will reveal that someone has stolen your identity, opened new accounts in your name, and has seriously harmed your credit score.
To review your credit reports for free, use the Federal Trade Commission’s approved website annualcreditreport.com to request a copy of your three credit reports once a year.
Protecting Your Credit Score: Credit Freezes
If you are worried about identity theft and do not plan on acquiring any new forms of credit anytime soon, you can initiate a credit freeze with each of the major credit reporting bureaus. A credit freeze effectively prevents anyone from opening a
new line of credit in your name. Contacting each credit reporting bureau and requesting that they initiate a freeze will mean that no one, even you, can open a new account until you choose to lift the credit freeze.