June 18, 2013

Don’t gamble with your future — keep track of your credit score

Do you know your credit score and what that ranking means? Credit scores average from a low range of 300 to a high range of over 800. Don’t expect you’ll uncover the formula for each of the nation’s three major credit agencies by surfing the web. This proprietary information is closely guarded. Competition among the big three – Trans Union, Experian and Equifax – is stiff. That’s understandable considering this industry niche impacts the lives of millions of people each day.

The first step is to ferret out errors that may exist on your credit report. People are only human, and reporting glitches do occur. But don’t expect finding an error or two is going to achieve a miraculous turnaround in a bad credit score. Many errors will likely have only a small impact on your overall score. However, there is always the possibility that a genuine error has negatively impacted your rating.

That’s exactly why laws have been passed allowing consumers a free credit report annually. However, the onus to order the report, review it and report any errors remains with the consumer. Make sure you do this once a year. And order a free report from all three credit-reporting firms because an error could pop up on one and not on the other two.

If you do find an error, contact all three credit-reporting agencies. Follow their respective procedures for correcting inaccuracies. Rest assured, you do have rights to dispute an item on your credit report. And remember to be polite!

If you have moved around a lot, this may affect your score but not necessarily in the way it would appear to at first glance. Credit agencies favor stability in lifestyle. That means that even seemingly positive developments, such as taking on a new job that requires a cross-country move may cause a brief decline in your credit score.

Paying down your debt will likely take a while but will prove an effective way to boost your credit rating. When you close credit card accounts through remitting payment in full, this can temporarily bump your score downward, too. Avoid this by steering clear of closing, opening or requesting a higher line of credit just before you want to increase your credit line.

Always remember the best way to maintain or increase a positive credit score is through using credit responsibly. This is far easier said than done for those who have grown accustomed to a higher standard of living fueled by easy credit. So your first order of business should be to curb your spending habits. You’re now on your way to maximizing your credit score.

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