Manage Your Finances by Checking on Your Credit Score

If you are like many Americans, you like checking on your credit score about as much as you like going to the dentist. This is another one of those things that you simply cannot avoid. It is important to have a good grasp on your credit history and your debts. Looking at your credit history will also help you understand your financial position much better. Having this information is important before making a big purchase like a home or vehicle.

You are entitled to a free credit report every year from each of the three credit agencies: Equifax, Experian and TransUnion. For a mortgage, however, what is important is your FICO score. This score can be called a Beacon, Fair Isaac Risk Model or Empirica. The name of the score will change based on which agency you are dealing with. To obtain a mortgage, your score needs to be over 500.

Make Sure Your Credit Report is Accurate Before Applying for a Loan

Your credit report needs to be accurate, so make sure your name, date of birth, social security number and current employer are correct. Items on your credit report will roll off after seven years, but a bankruptcy will stay on your report for ten years. If you have items like these, you need to be ready to explain them to a lender. Additionally, besides your payment history, your credit report contains information about wage garnishments, child support claims, bank issues, evictions, liens and foreclosures.

Although the order of the items can be different, any other errors or discrepancies on your credit report need to be addressed. Make a copy of the correct information and send it by certified mail to the creditor and to the credit reporting agency. These items can take time to be resolved, but if you have the proof you can share that information with a potential lender. There are many different kinds of disputes, but some of the common ones include on-time payments that are marked as late, items older than seven years that are still on the report, identity theft, typographical errors or mistakes from family situations like divorces.

Raise Your Credit Score by Paying Off Debts

If you do have debts to take care of that are on your credit report, work quickly to get these items resolved. Stop using the credit cards you have, but first check with your credit card company to make sure you can close the account without a penalty if there is an unpaid balance. If needed, transfer all of your balances to a single card so you only have to worry about one payment. You may also want to talk to a credit counselor.

Bringing your balances down will definitely boost your credit score. You can also ask your lender about a rapid rescoring if you are only waiting for errors on your report to be fixed.

Reestablishing credit can take time. If you have no credit or want to build your credit, get a secured credit card where you put a balance on the card and then have stay within the limits. Another option is to get a department score card that you will not overuse. The key is to only charge a small amount and pay the card off as soon as you can. Your credit score will improve and you will be able to make the purchases you want, it just takes time.

About Author : Lee Bell