MANAGING YOUR CREDIT SCORE THE MOST IMPORTANT NUMBER It’s not your Identity number, your phone number or your date of birth. While most of us don’t know this number, it essentially dictates your finances. This number is your credit score. A credit score is a number that lenders use to help them decide, “If I give this person a loan or credit card, how likely is it that I’ll be paid back on time each month?” Also called a risk score, this number is a statistical measure of the risk that you’ll be able to repay the debt as agreed. If you’re planning on making a major purchase, taking out a loan or applying for a credit card, youre going toned a good credit rating. If you’ve come to the realization that your rating isn’t as positive as you had hoped… it’s time to start improving it, and here’s your guide to getting started: FIND OUT WHERE YOU STAND The first step toward developing a better credit score is to determine where it currently stands. Start by checking with the major credit reporting agencies listed below. You’re entitled to make enquiries and you have the right to dispute any mistakes, so request that each send you a copy of your report . TransUnion – transunion Experian - experian CHECK OUT THE FACTS Credit reports in hand, take a good hard look at the data in front of you. Credit reports are rarely as spotless as you think – that one late payment on your Visa can stay on your report for up to seven years (long after you’ve forgotten about it). In addition, it has been reported that nearly 80% of credit reports contain at least one error, proving how vital it is to make sure that everything is accurate. After identifying any discrepancies, you need to eliminate them. A dispute form usually is sent along with your credit report – or you can request one from the CRA’s Web site – so fill out the form and send it back to the CRA as registered mail. Make sure you document each step that you take in clearing up your report in case you need backup later on. Fortunately, the law is on your side, stating that any item that is not verified as accurate must be removed from your report. DEBT ATTACK You’ve cleared up any errors, but there are still a few dark spots on your report. What’s a person to do now? • Identify any debts that are still pending and set up a plan for eliminating them (see my post on Dumping your Debt for tips). Clearing up debt can take time, which makes it even more important to get started immediately. Remember that you have the right to add remarks to your file, so take the opportunity to defend yourself and point out positive areas of your report, such as highlighting a loan that you paid on schedule. • Time is your best ally when it comes to your credit report – consistent payments (no matter how small, so long as they meet the minimum) prove that you are responsible enough to repay loans as promised. Over time they will outweigh the negative points on your credit report. • In order to avoid any ugly surprises, check your credit information regularly, especially 60 to 90 days before a major purchase (like a car or a home). • While there are no quick fixes for upping your score, taking out a loan that you don’t need and then paying it back in a short span of time can prove that you’re a good credit risk. • The ideal position is to have a few lines of credit, never more than what you could afford to pay off on your income, and with none of them maxed out. Cancel old cards that you never use, but don’t max out one giant line of credit by putting your entire debt on it. Prove your self-control by having between two and four lines of credit with a minimal or no balance on each.
Posted on: Thu, 29 May 2014 15:10:44 +0000
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