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How you handle your credit cards and other loans affects your creditworthiness. Remember to use your credit responsibly and be sensitive to the terms of the payment agreements you made when you established your accounts. Whether you choose to pay the total outstanding balance on your bills each month or just the minimum payment due, your payment must reach the financial institution or business by the payment due date. Your payment due date is typically within two or three days of the same time every month. If that time of the month is not convenient because it doesn't coincide with your paychecks, contact the creditor to see if your billing cycle can be changed. Or, adjust your budget accordingly.
Take the time to establish a monthly budget. Differentiate between the things you "need" and the things you "want." Start with your fixed expenses or "needs"—like rent, food, utility bills, phone bills, car loans, and insurance payments. Then figure in variable "wants" like clothing, eating out, and entertainment. Subtract your expenses from your income and you have your starting point. If the sum is below zero, it's time to reduce your expenses by cutting out any unnecessary spending on "wants." You'll be amazed how much money you'll save by investigating all opportunities for discounts.
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If you've been denied credit because of information supplied by a credit bureau, federal law requires the creditor to give you the name of the bureau that supplied the information. If you contact that credit bureau within 60 days of receiving the denial, you are entitled to a free copy of your credit report. If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge. However, if negative information on your credit file is accurate, then only time and responsible credit habits can help restore a bad credit history. If the creditor informs you that your credit application was declined because of an "insufficient credit file," and you are a full-time student, you may want to contact the creditor and make sure that the company knows you are a full-time student. They might agree to give you a lower initial credit line to start your credit file. As you advance through college and perhaps go on to graduate school, you can request to
have our line increased.
It's important to note that under the Equal Credit Opportunity Act, financial institutions must make credit equally available to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age, and without regard to whether all or part of the applicant's income derives from public assistance, or if the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
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Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we don't live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate.
Here are FIVE REASONS why you should make a practice of regularly reviewing your credit report:
- Inaccuracies & Mixed Credit Files:
Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to dispute. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to contact the credit bureau to dispute inaccurate information promptly.
- Tracking & Payments:
One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen--a delay in the payment being received can kick you over to a 30-day delinquency. This has a negaive affect on your credit, and creditors don't take it lightly. If you call your creditor and explain the situation, they might adjust the info, but you need your credit report to know whether you have a delinquency or not.
- Identity Theft:
This issue alone is reason to order your credit report immediately. Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. The best way to catch a thief who is using your name is by getting a copy of your credit report, which will show you if there are accounts listed you know you haven't opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account.
- Inquiries:
If you're shopping around for a loan or more credit, you should know when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as negative by creditors. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you didn't authorize someone to look at your credit report and they did, they may have broken the law. Who's been looking at your credit? 0
- Credit Fraud--Unauthorized Charges:
Credit fraud involves the theft of your credit card or account number to make unauthorized charges to your account. Though consumers are protected financially from this abuse, other creditors may take note of all this activity and decide to raise your interest rates or refuse to grant you a loan. Ordering your credit report will help you catch new activity on accounts that you haven't been using, or may have closed. When it comes to managing your credit worthiness, your credit report is your best resource. Your credit report gives you the opportunity to manage your credit wisely, while planning your credit strategy for achieving future goals.
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