Protecting your credit
I was talking to an elder friend of mine the other day, and he started telling me a story about a friend of his who was a banker. This banker friend gave him a lot of sage advise over the years. One of the best quotes he ever got from Mr. Banker was this: Your credit is the biggest asset of your life. Protect it as if it were life or death. And befriend your banker, always! Over the years this elder friend of mine took this advise very seriously and as a result he told me of all of the benefits this advise gave him.
During hard times, my elder friend was able to call Mr. Banker and get money transferred into his account to cover the emergencies that came up, just on his signature. When he was selling a home a few years back in order to buy another one, and he was going to pay cash for the new home with the proceeds from the house he was selling. When the buyer of his current home was admitted to the hospital on an emergency, and they were afraid of losing the new home, he was able to get the money for the second home until the first one closed. That is the kind of thing protecting your credit will afford you in times of emergencies.
Protecting Your Credit
Today it is even more important to protect your credit. Even before you buy a home, you are judged on your credit. Things like applying for a job, or moving to a rental home are dependent on your credit today. You may lose that great job based on your credit score even if everything else is perfect. Renting a home can be very tough because most nice rentals come with criminal background and credit checks. Nobody wants to live next to a criminal, and nobody rents to someone that doesn’t pay their bills. The interest rate you are charged for a car loan or a credit card will be effected by your credit score. And did you know that even your rates for car and home insurance are effected by your credit score? Today it is more important than ever to protect your credit as if it were life or death. It seems like everything you touch is related to your credit score.
If you are in the dark about your credit, here are a few things that you can do in order to keep your credit in tip top shape.
Always pay your bills on time. This is very important. Each time you are late it will be reported to all three credit agencies. Each late report will cost you points.
Never allow your credit card charges to exceed 40% of your allowable balance per card, and pay them off as quickly as possible.
Never, ever sign for a loan or credit of any kind, for someone else. Not even your closest friend or family member. They can take you down with them, and their credit can become linked with yours. If they need a co-signer, then they are asking you to share in their credit, and it will lower your scores. Now you will be effected by them and may need a co-signer of your own. This goes both ways. Never ask someone to co-sign for you if your credit is compromised. It will effect their credit, and can harm them. Keep in mind the old adage: No good deed goes unpunished. This applies here.
Keep an eye on your credit regularly. There are three agencies: Experian Transunion and Equifax . Each has a unique scoring system, and you will want to know what each has to say about you. You are able to get a free copy of your credit history once a year. The only place that the government recommends is: www.annualcreditreport.com
Go there and sign in. You will want to pull all three of the credit bureaus. Be sure you download each report before closing out. You only get one chance per year, and once out you have to pay to get back in. (Remember it is free once a year!) For free you will get your complete history, with all of the bills you have, and how your have been paying them. What you want to look for is the section for adverse history. You will want to do what you can to get any of those items off of your report, if possible.
Each will ask you if you want your credit score. It is well worth the price to get each of them to give you an idea for where you are from year to year. I believe they were all under $10 per score. Score range from 0 to 850. In order to get a home with the best rates you need to be above 725. You can still get a home with higher interest rates, as low as 540, but you will pay much more. The goal is to be at the 725 or higher score always.
I can’t recall which one it is, but one of them will also ask you if you want a reminder for the next year. Click yes! This way you will remember to check every year at the same time for free. Always compare the reports from year to year to see how you are doing.
If you have any items listed that you believe are mistakes, be sure and check with all three agencies right away. These items can take a while to clear up and so you need to start work on them immediately.
If you are in the market for a new car or a new home, or if you just want to get a new credit card, you will want to be prepared ahead of time and make sure that there are no surprises before you sit down in front of anyone. This is the best way to do so.
If you want to protect yourself from fraud, or identity theft, set up a fraud alert with the credit bureaus. You may want to do this on a regular basis. Just be sure that you fully understand what you are signing up for before setting it in place.
You can set up a credit freeze on your account through each of the three credit bureaus so that nobody can access your credit account without a pin, even if they know your social security number and birth date. You will also need to fully understand what the rules are for this, but it will keep your account from being accessed by any unauthorized persons.
You can also sign up for a company that will monitor it for you, something like Lifelock or IdentityGuard. I am sure that there are other companies out there as well. For a fee they will contact you any time that your credit is looked at, or any time anything is reported, good or bad.
If you take the advise of Mr. Banker from my friend, you too will have the advantages that my friend had throughout his life. Remember, your credit is the most valuable asset you have. And get to know your banker.
Protecting your credit