Monday, October 27, 2014

Rule of Real Estate: Know your numbers. Check your credit score for FREE

Answer this question honestly:  
When was the last time that you pulled your credit reports? 

The fact is, your numbers matter!  I did the annual examination of my credit reports this AM- fast, easy, and painless.  I figured that this would be the perfect time to share the information on the blog with you!

Did you know that under the Federal Fair and Accurate Credit Transactions Act (FACTA), you are entitled to a free peek at your credit report once per year?  To comply with their obligations under FACTA, the three major credit reporting agencies (Equifax, Experian, and TransUnion) organized the web site,  allowing consumers a way to easily exercise this right.  The website is safe and FREE TO YOU, providing all American consumers an easy mechanism to receive their three free credit reports per year.

Ok, so why don't people use this service?  After 13 years of discussing money matters with clients, I hear 4 reasons repeatedly.

1) I didn't know about the service.
2) I hate talking credit.
3) I have no plans for a big purchase, so why bother
4) By FAR, the most common- I don't want to damage my credit

Whether preparing for a large purchase (house or car) or NOT, an annual credit report check is necessary and advised to ensure that you are "moving in the right direction", that your identity has not been compromised, and to allow you the ability and adequate time to dispute any discrepancies. 

I equate the fear of facings ones' numbers to someone who refuses to go to the doctor every year.  The fact is: knowledge is power. Once you rip off the band-aid and HAVE the information in hand... you can work with it. When it comes to your finances (or your health for that matter), ignorance is NOT bliss.  If your goal is to build and maintain a healthy credit score, checking your credit report on a regular basis is a good first step. 

Just do it.  Face the music.  Take control of your finances and pull your report HERE.  You will be relieved that you did, I promise!

Per the Annual Credit Report site:  Keeping an eye out for three things can help to have a positive impact on your credit score: suspicious information, score factors and signs of identity theft. It’s a common misconception that having your credit checked will harm your score and this isn’t always the case. 

There are two types of credit inquiries

Hard Inquiries
These types of inquiries, such as when a potential lender checks your credit report to approve a loan, application, rental agreement or other contract, can show up on your credit report and damage your score to some degree. Companies will need your permission to review your credit report. 

Soft Inquiries
These inquires occur when you’ve given permission to access your credit report for things like employee background checks or when you review your own report. Soft inquires won’t affect your credit score.

Checking Your Credit Report for Signs of Identity Theft

The following issues may be indications that you’re a victim of identity theft:

  • Accounts that don’t belong to you
  • Inquiries that you haven’t authorized
  • Addresses that you can’t recognize or haven’t lived at
  • Checking for Unfamiliar Information

Sometimes information on your credit report is reported incorrectly by the company to the credit bureau. Some examples of incorrect reporting include:

  • Accounts that are open being reported as closed
  • Late payment reports that never occurred
  • Incorrect numbers that deal with credit balances or credit limits

Reviewing Your Credit Score Factors

Your next step is to take a look at your credit score factors. These detail those issues that hurt or help your credit score. 

Positive credit score factors include: punctual payment history, age of accounts and low balances. 

Negative score factors include: being been more than 30 days late, having several inquiries, and having one or more legal judgments in your credit report.