Sandra Stammberger asked:


Credit report monitoring is a smart move for anyone these days. Credit report monitoring can provide an early warning if someone has committed identity theft against you, a problem that is becoming more and more prevalent as technology makes it easier for thieves to obtain confidential information that in years past would have been harder to get. By performing regular credit report monitoring you’ll be able to verify both the good and bad reports against you and make sure that they are accurate.

Another reason for regular credit report monitoring is the simple fact that credit reporting agencies do sometimes make mistakes. If you are the victim of an error, then regular credit report monitoring can help you find the error as soon as it occurs, or shortly thereafter and take corrective action. The sooner you know about a problem, the sooner you can fix it, and quick action is the key to assurance of accuracy and making sure that your credit report will help you and not hurt you. If you are not actively engaged in regular credit report monitoring you may never be aware of the problem.

Many people think that a credit report monitoring doesn’t matter in their lives, but we live in an age where credit reports are used as an indicator of trustworthiness by many companies and individuals. Having a poor credit report can get you turned down for an apartment, and having a good credit report can get you accepted. If you are not engaged in credit report monitoring you may have some nasty surprises in store. Credit report monitoring and taking corrective action when mistakes occur can make the difference in getting the job you want, or the promotion at your current place of employment. Even insurance companies sometimes check credit reports when deciding whether or not a person is a good risk for an insurance policy.

If you have negative points on your credit report that are deserved, then you can work to improve the report but you need to use credit report monitoring to be aware of them. If you have negative entries due to mistakes or identity theft, then regular credit report monitoring can inform you of this and allow you to fix the problem before it hurts you. With all the benefits that come from regular credit report monitoring, everyone should take time to check their own credit report. Credit report monitoring is made even easier by the legislation that every consumer is entitled to one free copy of their credit report a year. Credit report monitoring is most effective if it is carried out more than once a year, but it is a start.



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Jon Arnold asked:


Considering how valuable your credit report and your resulting credit score are to you, it never ceases to amaze me how many people believe in and rely on misconceptions, myths, and downright bunk about how credit reporting really works. To adequately function in today’s society, one’s credit score needs to be at least at the “ok” level, and people with bad credit or poor credit are only accelerating their downward spiral by not doing something about it.

The sad part is that there ARE things you can do to improve your credit score. While those things take effort, they do not necessarily require money and these are all things you can do at home.

Most people do not realize that they have three entirely separate and distinct credit reports, one from each of the three credit reporting bureaus. Since these bureaus do not share information, they each report what they think they know, which in reality means that not one of them has a true and complete picture of your credit. To add insult to injury, chances are extremely high that your credit report with at least one (if not all) of the credit bureaus contains errors, and the only way the errors will get fixed and removed is if YOU dispute them. I have heard of people whose credit score jumped more than 100 points in less than a month after they got various inaccurate pieces of information removed from their credit profile.

But let’s spend some time here talking about some very common myths about credit, credit scores, and credit reporting, and find out what the real deal is on this misconceptions.

Myth #1: Paying off a negative account on your credit report will get it removed from your report.

This is not true at all. That account will remain on your credit report for years, plainly showing for all to see that it went past due, it went delinquent, and then you paid it off. But since it is part and parcel of your credit history, it stays on your credit history for years. Remember, your credit history is exactly that – a HISTORY of your dealings with credit, and just because an account is closed or paid off does not dismiss the fact that it is still part of your credit history.

Myth #2: Paying off an account will cause your credit score to increase significantly.

Again not true. There are a huge number of factors that come into play when the credit bureaus calculate your credit score. Chief amongst those factors are have you been paying your financial obligations on time with at least the minimum payment due. Paying off an account entirely can actually do more damage than good. Having credit in good standing, but keeping your balance less than about 32% of your credit limit is a great place to be, and you gain no additional points by paying off that account.

Myth #3: Checking your credit reports will lower your credit score.

Yet again not true. The financially savvy consumer will check his credit report at least once a year, sometimes more often. Every time someone requests a copy of your credit report, that fact is flagged, but it is also flagged as to WHO requested your credit report. If it was you, then it does nothing to your credit score, as opposed to having your credit report requested by 12 different loan companies, which is almost sure to raise a red flag and lower your score.

Myth #4: Cosigning for a loan does not mean you are responsible for the account.

Not at all true. The reason you were requested to co-sign on a loan or an account for someone is because they themselves have insufficient credit history or have bad credit history. The act of you co-signing on it is you telling the financial institution “hey, if they default on this, I’ll take care of it”, so you DO have responsibility for the loan. But it gets worse – if the person who took out the loan starts to default on it, then it is also YOUR credit score that suffers, since again, you co-signed on it, giving you some responsibility for making sure they repay it on time.

Understand how the credit game is played. You cannot win any game if you don’t know the rules, and since credit affects a lot of different aspects of your life, it is well worth your time to understand the factors and the myths about how your credit score is derived.



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