How to Build
a Good
Credit
Profile
How you
handle your
credit cards
and other
loans
affects your
creditworthiness.
Remember to
use your
credit
responsibly
and be
sensitive to
the terms of
the payment
agreements
you made
when you
established
your
accounts.
Whether you
choose to
pay the
total
outstanding
balance on
your bills
each month
or just the
minimum
payment due,
your payment
must reach
the
financial
institution
or business
by the
payment due
date. Your
payment due
date is
typically
within two
or three
days of the
same time
every month.
If that time
of the month
is not
convenient
because it
doesn't
coincide
with your
paychecks,
contact the
creditor to
see if your
billing
cycle can be
changed. Or,
adjust your
budget
accordingly.
Take
the time to establish a monthly
budget. Differentiate between
the things you "need" and the
things you "want." Start with
your fixed expenses or "needs"—like
rent, food, utility bills, phone
bills, car loans, and insurance
payments. Then figure in variable
"wants" like clothing, eating
out, and entertainment. Subtract
your expenses from your income
and you have your starting point.
If the sum is below zero, it's
time to reduce your expenses by
cutting out any unnecessary spending
on "wants." You'll be amazed how
much money you'll save by investigating
all opportunities for discounts.
If Your
Credit
Application
is Denied
If you've
been denied
credit
because of
information
supplied by
a credit
bureau,
federal law
requires the
creditor to
give you the
name of the
bureau that
supplied the
information.
If you
contact that
credit
bureau
within 60
days of
receiving
the denial,
you are
entitled to
a free copy
of your
credit
report. If
you find an
error in
your report,
you are
entitled to
have it
investigated
by the
credit
bureau and
corrected at
no charge.
However, if
negative
information
on your
credit file
is accurate,
then only
time and
responsible
credit
habits can
help restore
a bad credit
history. If
the creditor
informs you
that your
credit
application
was declined
because of
an
"insufficient
credit
file," and
you are a
full-time
student, you
may want to
contact the
creditor and
make sure
that the
company
knows you
are a
full-time
student.
They might
agree to
give you a
lower
initial
credit line
to start
your credit
file. As you
advance
through
college and
perhaps go
on to
graduate
school, you
can request
to have your
line
increased.
It's
important to
note that
under the
Equal Credit
Opportunity
Act,
financial
institutions
must make
credit
equally
available to
all
creditworthy
applicants
without
regard to
race, color,
religion,
national
origin, sex,
marital
status, or
age, and
without
regard to
whether all
or part of
the
applicant's
income
derives from
public
assistance,
or if the
applicant
has in good
faith
exercised
any right
under the
Consumer
Credit
Protection
Act.
Important
Reasons to
Check Your
Credit:
Ideally,
your credit
report is an
accurate,
up-to-date
reflection
of your
credit
history.
However,
since we
don't live
in an ideal
world, there
are many
reasons that
your credit
report could
contain
inaccuracies
that might
prevent you
from
receiving
the credit
you deserve.
The good
news is you
can take
action to
keep your
report
accurate.
Here are
FIVE REASONS
why you
should make
a practice
of regularly
reviewing
your credit
report:
Inaccuracies
& Mixed
Credit
Files: Many
inaccuracies
on a credit
report can
be the
result of
simple human
error, and
are
therefore
are not
difficult to
dispute.
Whether the
inaccuracies
relate to
payments not
credited,
late
payments, or
data mixed
in from the
credit file
of someone
else with a
name similar
to yours,
you will
want to
contact the
credit
bureau to
dispute
inaccurate
information
promptly.
Periodically
checking
your credit
report is
essential
for
maintaining
good credit.
Tracking &
Payments:
One of the
most
important
elements of
credit is a
demonstrated
history of
on time
payments.
Once you
send the
check
though,
anything can
happen--a
delay in the
payment
being
received can
kick you
over to a
30-day
delinquency.
This has a
negative
affect on
your credit,
and
creditors
don't take
it lightly.
If you call
your
creditor and
explain the
situation,
they might
adjust the
info, but
you need
your credit
report to
know whether
you have a
delinquency
or not.
Identity
Theft: This
issue alone
is reason to
order your
credit
report
immediately.
Identity
theft is an
insidious
crime,
involving a
thief who
assumes your
name to open
new
accounts,
divert your
card
statements
to another
address, and
run up all
sorts of bad
debt without
you ever
knowing
about it
until
collectors
come
calling. The
best way to
catch a
thief who is
using your
name is by
getting a
copy of your
credit
report,
which will
show you if
there are
accounts
listed you
know you
haven't
opened. For
example, if
a thief has
intercepted
a
pre-approved
credit card
offer in
your name
and sent it
in with a
change of
address,
your credit
report will
include the
account.
Inquiries:
If you're
shopping
around for a
loan or more
credit, you
should know
when
creditors
check your
credit, it
places an
inquiry on
your credit
report.
Inquiries
can add up,
which is
often
interpreted
as negative
by
creditors.
For this
reason, too
many
inquiries
can actually
make getting
credit more
difficult.
Moreover, if
you didn't
authorize
someone to
look at your
credit
report and
they did,
they may
have broken
the law.
Who's been
looking at
your credit?
Credit
Fraud--Unauthorized
Charges:
Credit fraud
involves the
theft of
your credit
card or
account
number to
make
unauthorized
charges to
your
account.
Though
consumers
are
protected
financially
from this
abuse, other
creditors
may take
note of all
this
activity and
decide to
raise your
interest
rates or
refuse to
grant you a
loan.
Ordering
your credit
report will
help you
catch new
activity on
accounts
that you
haven't been
using, or
may have
closed. When
it comes to
managing
your credit
worthiness,
your credit
report is
your best
resource.
Your credit
report gives
you the
opportunity
to manage
your credit
wisely,
while
planning
your credit
strategy for
achieving
future
goals.
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