What are the three components of your credit score that every American should double-check? Keep reading to learn more...
Many Americans are shocked when they spend a few minutes to check their free credit score through the
MyLendingTree™
Official Site. What if someone reported you as being late on a
payment? Or someone else’s financial information ended up on your
credit report?
Or (heaven forbid) what if someone stole your identity and ran up huge debt in your name?
These scenarios would hit your credit score hard…and hurt your ability to get a loan, job, or even an apartment. Unfortunately, mistakes on credit reports are all too common. That’s why you should
check your credit score
regularly – at least once a year.In this article, we’ll show you how to make sure all the information on your credit report is accurate. You’ll also learn how to get negative marks (like late payments) removed from your credit report and how to tell if someone has hijacked your identity.
But first, you'll need to check your score and review the 5 different components that are used to determine your score, so you can follow along. As we briefly mentioned above, the quickest and easiest way to do this for free is through MyLendingTree™. All you do is answer a few basic questions through their automated tool, and within seconds you’ll get your credit score and breakdown.
Free Credit Check
Before moving on to the next step, take a moment to check your score. Once you have it, please continue reading to learn what you should be looking for.
The Three Main Culprits That Can Torpedo Your Credit Score
Culprit #1: Identify Theft
Every two seconds, someone becomes a victim of identity theft. That’s 15 million Americans every year! Worse, many victims of identity theft don’t know they’ve been targeted for weeks, months or even years after the fact. According to a recent study by the WhiteHouse, Identity Fraud costs Americans an outstanding $16 billion per year.They only find out when they’ve been declined for a loan or when they start getting hounded by debt collectors. This is especially important after tax season (especially if you haven’t been submitting your returns) because it’s the most popular time of year for thieves to steal people’s identities. That’s why it’s so important to monitor your credit report and bank account information regularly. That way you can spot suspicious activity in your accounts that could signify identity theft:
In addition to regular account monitoring, which you can do through MyLendingTree™ you should always:
(1) Shred documents containing personal information
(2) Password-protect all of your electronic devices
(3) Use strong passwords for your accounts
(4) Don't log into bank accounts on a public WiFi connection
(5) Password-protect your WiFi at home
While monitoring is a good start, many choose to purchase an identity theft detection product that includes identify theft restoration. That way if you do become an identity theft victim, you’ll be notified quickly and be able to access certified specialists to help restore your identity.
GoFreeCredit is another credit check service, however the also offer $1 million in identify theft insurance for $19.95/month.
GoFreeCredit
Culprit #2: Wrong Information
Wrong information on your credit report is often the result of the report being incomplete or containing information about someone else.This typically happens because:
(1) Someone applied for credit under a name different name
(2) Information about the person who applied for credit is wrong (name, address, etc.) because of an inaccurately submitted application, or the person who entered the information made a clerical error
(3) The person applying for credit gave the wrong social security number, or the lender inaccurately entered the number
(4) Payments were accidentally applied to the wrong account.
So, what you need to do to make sure all of your credit information is correct is:
(1) Check to make sure any negative marks on your report are accurate
(2) Make sure your available credit is accurate
(3) Make sure your personal data is correct.
"Never underestimate the potential for human error – especially when it comes to your credit report"
Culprit #3: Negative Marks
There are four common negative marks to watch for. Some will only go away based on time. Others can be disputed and removed.By disputing or negotiating with your creditors to have negative marks removed, you may be able to significantly raise your credit score.
Of course, you need to know whether you have any negative marks to begin with. That’s why it’s critical to take advantage of MyLendingTree’s free tool if you haven't already. Here they are:
a) Bankruptcy & Foreclosure - Unfortunately, only time can take these ones away – and that’s 7-10 years in this case.
b) High Credit Utilization Ratio - This is the amount of credit you have in use on your cards compared to your total available credit. For example, if you have a card with a $10,000 limit and your balance is $5,000, your credit utilization ratio would be 50%. This mark accounts for 30% of your overall credit score. Fortunately, the negative effect of a poor credit utilization ratio can be short – it can last as few as 30 days (provided you lower it ASAP).
c) Hard Inquiry - A hard inquiry is when you apply for a new loan. It stays on your credit report for about 2 years, and will cause a temporary dip in your credit score for about 6 months. That’s why it’s a good idea to only apply for credit you actually need. A soft inquiry is when you pull your own credit report to check for accuracy. It has no impact on your credit score.
d) Delinquency - This is when you’re behind on a payment. Sometimes you can work with your lender to have a delinquency removed from your credit report. One way to do that is to request a goodwill adjustment from the creditor. What you do is write the creditor a letter explaining why you were late and asking them to forgive you and adjust your credit report accordingly. You can also offer to sign up for automatic payments in exchange for removing the late payment data from your report. And finally, you can dispute the late payment if it’s inaccurate.
Check To See If You Have Any Negative Marks That Are Damaging Your Score
Conclusion
Because the information your credit report contains affects whether you can get a loan – and how much you’ll have to pay to borrow money – it’s critical to keep regular tabs on it. So make sure you check it at least once a year.In addition to this annual review, it’s critical to check your report BEFORE you apply for a major loan purchase, like for a house or car, as well as before you seek employment (yes, your credit score can be a factor in whether or not you get that dream job).
And most importantly, you need to check your credit report to make sure you don’t become a victim of identity theft.
Imagine the headaches you’ll save yourself if you discover an error on your credit report (which is all too common) before you apply for a loan or job.
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