February 15, 2016
Written by: Kristin Gross, Asset Building Coach at La Casa de Esperanza
According to the Federal Trade Commission, one in five consumers has an error on at least one of their credit reports. According to the same study, five percent of consumers had errors that could cause them to have higher interest rates on auto loans or insurance plans. Having good credit is essential for your financial health!
Here are five tips to guide you in maintaining a good score:
- Request a free credit report: Get a free copy of your credit report every 12 months from each credit reporting company at AnnualCreditReport.com. Since there are three credit reporting agencies, TransUnion, Experian, and Equifax, you can request all three at once, or one every four months to cover you year round. Although you are entitled to a free credit report, these reports do not include a score – you will have to pay extra for it.
- Dispute Errors: If you find an error on any of the three credit reports, make sure to submit a dispute. You can submit a dispute online. The reporting agency then has 30 days to investigate and must respond with the result of their investigation.
- Pay on Time: An overdue bill can have a larger impact on your credit. Set up automated deductions to ensure your payment is always on time and you will see your score rise.
- Pay down Debt: Having large balances on your credit cards actually hurts your credit, even if you are paying on time. Ideally, you don’t want to have a balance higher than 30% of your total available credit on your credit cards.
- Avoid Scams: Don’t ever pay for credit building or credit repair. Many companies advertise debt consolidation or reduction but, they are usually scams that hurt your score.
If you run your credit reports and find you don’t have a score, go to your Bank or Credit Union and ask to open a secured credit card or ask about credit building options. Most lending institutions have accounts to help you start to establish and build good credit.
Kristin Gross is an Asset Building Coach for the Financial Stability Initiative at La Casa de Esperanza, in Waukesha, Wisconsin. The Financial Stability Initiative is a partnership between La Casa de Esperanza and the United Way of Greater Milwaukee & Waukesha County. Kristin has her Bachelor’s degree in Personal Finance from the University of Wisconsin – Madison. She is a financial coach and educator working with individuals and families on obtaining tools for financial capability by meeting basic needs, building savings and gaining assets. She enjoys sharing her knowledge of personal finances to positively impact the lives of others.