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Five Ways to Improve Your Credit Score

April 23, 2009

in Money Management

Our credit scores play a big role in determining the results when we apply for a credit card or loan. A good credit score can help us get the credit we need at the best possible rate. A poor credit score could result in a higher interest rate or denial of credit. It is in our best interest to make sure our credit scores are as high as possible.

The credit bureaus keep the exact method for figuring credit scores a mystery. But there are a number of factors that are known to impact our credit scores. Here are five things you can do to improve yours:

1. Keep an eye on the information contained in your credit report. Sometimes the bureaus make mistakes, and identity theft can also wreak havoc on one’s credit report and score. Federal law requires each credit bureau to provide one free report per year to any consumer who requests it online, by phone or in writing, and we are also entitled to a free report if we are denied credit. So check your report regularly, and if you find any inaccuracies, dispute them in writing.

2. Always pay your bills on time. Even if you’ve made payments late in the past, keeping current bills paid on schedule will help raise your credit score. The longer your history of keeping payments current, the more it will improve your credit score.

3. Keep credit card balances low. Just because you have a $10,000 credit limit, that doesn’t mean you should use it all. A good rule of thumb is to keep each credit card balance at or below 25 percent of the limit. Even if you have a perfect payment history, carrying too large of a balance can adversely affect your credit score.

4. Avoid opening too many accounts in a short time frame. This is especially important if you have a short credit history, but it also applies if you have well-established credit. Opening lots of accounts in rapid succession raises concerns that you could get in over your head, hence lowering your credit score.

5. If you pay off an account, keep it open. This will help by lengthening your credit history. It can also reduce your balance to credit limit ratio, unless you transferred the balance to another card.

Improving your credit score is not as difficult as you might think. A few simple adjustments can really make a difference, but it does take some time. If you are planning to apply for credit, start working on your credit score a few months ahead of time. This will increase your chances of getting the loan or credit card, and it could save you lots of money on interest.

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Three Identity Theft Prevention Tips

April 21, 2009

in Money Management

Having your identity stolen is no picnic. It can cause serious damage to your credit, and possibly even your criminal record. Identity theft victims spend a lot of time and money trying to clear their names, and all too often they are unsuccessful.

We’ve all heard the expression, “An ounce of prevention is worth a pound of cure.” This certainly applies when it comes to identity theft. While in many cases identity theft occurs through no fault of the victim, there are things you can do to reduce your chance of becoming a target.

Tip #1: Keep Your Mailbox and Garbage Free of Personal Information

It may sound archaic, but dumpster diving is still alive and well. Some identity thieves still rummage through other people’s trash in hopes of finding personal information they can use. Fortunately, having your identity stolen from your garbage is fairly easy to prevent. Just shred anything that has account numbers, your Social Security Number or any other identifying information on it before tossing it.

Stolen mail also remains a popular source of information for identity thieves. Make it a point to check your mail as soon as possible after it’s delivered, and never leave it in the box overnight. You can also stop receiving unsolicited credit card and loan offers by calling 1-888-5OPTOUT. This will reduce the number of things in your mail that a would-be thief could use.

Tip #2: Use Your Information Wisely Online

Online banking and shopping are wonderful conveniences, but they can also provide opportunities for identity thieves. Some send “phishing” emails that are designed to look like they came from your bank, requesting information such as account numbers and passwords. Others set up fake online stores to steal information from people who shop online.

An important rule of thumb is to never, ever click on a link in an email that requests personal information. Instead, type the URL of the bank or company that the email claims to be from directly into your browser’s address bar. When you log into your account, there should be a request for information there if it is legitimate. If there’s any doubt, call the institution using a number from your statement or the phone book and ask.

When shopping online, only give your personal information and credit card number to companies you trust. Also, make sure that the page you enter information into is secure. If it is, there will be a lock icon at the bottom of your browser, and the URL will begin with “https” instead of “http.”

Tip #3: Watch and Protect Your Credit Report

Keeping an eye on your credit report may not prevent identity theft from happening in the first place, but it can help you catch problems quickly. As soon as you see suspicious activity, report it to the credit bureaus and have a fraud alert placed on your credit report. This will keep the thief from opening any more accounts in your name.

It’s also important to put a fraud alert on your report if you find out that your information has been stolen from a third party. Companies are required to inform their customers when their personal information has or may have been stolen from their files or computers. If you receive such a notice, call the credit bureaus immediately, request a report, and initiate a fraud alert.

Identity thieves are a persistent lot. But if you make it as difficult as possible to obtain and use your personal information, they will likely move on. There are plenty more identities out there that may be easier marks.

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