Friday, August 16, 2013

Credit Score Fix: First Steps

Don't make me look
I avoided checking my credit score for years out of an assumption that it would be mediocre at best. Since I didn't know how to fix it, the idea of even looking at it seemed overwhelming.

I wish I had been talked out of that thinking earlier.

First of all, avoiding a problem doesn't make it go away. We all know this, but sometimes we get wrapped up in fear and prefer to turn into Scarlet O'Hara and tell ourselves "I'll think about that tomorrow." Some people do this with doctor appointments, some with career goals, and some with finances. But whether it's good or bad, one's credit certainly will not get better on its own.

If fear is something that stops one from checking her score, perhaps it can be used to encourage her to check her score instead. Not only will incorrect information on one's account affect major credit issues like renting an apartment or taking out a car loan, but a poor score will also make the interest rates higher on a car loan, and make getting housing more difficult.

Still not convinced? Potential employers often check credit scores before hiring new employees. So if one is not aware of her credit score, she could be getting turned down from jobs for the simple reason that something is wrong in her report.

It really is much easier to check than I realized.

Americans are all allowed to check each of their three credit scores once a year for free. Many people split this up so that they alternate checking one of the three scores every four months. But to start, checking all three is important, so get all three for free at the same time.

I actually think using one of the services is best for this, because it's already overwhelming for someone who has never checked her score, and using a service makes it easier, which means it might actually get checked. So to start, going the simple route of using Credit Karma, Free Credit Report, or one of the many other free services is my suggestion. These sites list all three scores together in one place, which makes it much easier for the first time. They also use tools to show where there are issues one should check on, which is very helpful as one starts to understand how it all works.

The first things to look for are obvious, and cost nothing.

Needless to say, one should make certain there are no mistaken accounts one does not recognize. If there are, a quick Google search will often explain what the abbreviation stands for, and if it is still unrecognizable, one must begin to dispute the charge.

Something else to get started on right away is checking the way one's name is spelled on each score. If each of the reporting agencies are spelling one's name differently, each and every account she has may show up multiple times. This can affect one's score by looking as though there are more open accounts than actually are open.

Getting started on fixing one's credit is not as difficult as it seems either.

The most important thing is to make absolutely certain that no bills are paid late. Ever. This one thing will make a big difference in one's score, as a single late payment will stay on one's report for up to seven years. I am careful to pay my bills on time, but a few years ago when I switched one account's bills from mail to email, I missed an $11 charge I had completely forgotten about, thinking the account was clear. It was incredibly frustrating to see it show up month after month on my score, so be careful.

It is likely there will be a few mistakes. Disputing mistakes may require phone calls and faxes, so know it will take some time, and try to stay organized about which companies have been contacted, and when. It's also helpful to note when the company will report the error to the agency. If corrections are not made, one can refer to the last conversation's date, which can be helpful.

So go ahead and check it this weekend. One may be pleasantly surprised by her score, but even if she is not, there may be easy things to correct that will improve it. The important thing is just to start. After all, as Lao-tzu encouraged, even "a journey of a thousand miles begins with a single step."

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-Kurt Vonnegut