As a consumer in the United States, your credit profile can determine the interest rates you pay on loans, the type of apartment you can rent, and even whether or not you get a certain job. Identifying and fixing errors on your credit reports is vital to improving a bad situation but monitoring your credit can also prevent many issues. How can you monitor your credit to avoid digging yourself out of a hole? Here are four strategies you can use today.
- Review your credit reports regularly – You can obtain a copy of your report for free each year, but if you want to be able to review your credit reports more regularly, considering signing up for a service that allows you to obtain periodic, updated reports. By reviewing your reports on a regular basis, you’ll be aware of changes within a few months and can adjust accordingly. Allowing an inaccurate item to remain on your report for years could make it even more difficult to remove. Keeping yourself abreast of changes on your reports will inevitably make you more constantly aware of your credit and how your choices will affect it in the future.
- Track your credit score – Following your credit score can give you a snapshot at the health of your credit. Monitoring your credit score alone won’t give you as much information as your credit report as a whole, but it will keep you up to date because of its ease of review. Many banks and credit card companies will allow you to see a credit score estimate through a smart phone app or a website as frequently as you would like. Take advantage of such services to see how actions you’ve taken lately affect your credit score.
- Review your recent hard credit inquiries – Hard inquiries can have a big negative impact on your score if you rack up too many in too short of a time. Follow what inquiries have been made to ensure that you’re not applying for too much credit in a short time. Following your hard inquiries is also a good way to prevent identity theft. Many instances of identity theft start by someone trying to open a line of credit in your name. If you see a hard inquiry that you don’t recognize, start asking questions. You may be able to catch fraud before your bank does.
- Identify and follow all your lines of credit – Many consumers may not be able to even identify all the lines of credit that they currently have. Lines of credit include things like credit cards, personal loans, mortgages, and student loans. Not all lines of credit are evaluated the same by the major credit bureaus, however, so learn which ones can help and hurt your credit the most. Be sure to stay up to date on payments to avoid extra interest and penalties, and to avoid negative trade lines reported to the credit bureaus. Keep yourself aware.
The more aware you are of everything that affects your credit, the better your credit will tend to be. Keeping yourself abreast of your credit will help you keep your credit in mind every time you make a financial decision.
