Bankruptcy & Foreclosures

Are you under the impression that too much debt will drag down your credit score? If so, it is good that you are thinking this way. While debt is not necessarily a bad thing, you do need to know what it can do to your credit score, both the good and bad.

To get started, it is important to realize that debt can be a good thing if you pay it on time. In fact, 35 percent of your credit score is based on your payment history. So if you never miss a payment or send one late, you are going to be doing your credit score a lot of good.

Of course, there is a downside to debt as well. Thirty percent of your credit score is based on how much debt you owe. For example, if you have a credit card with a $20k limit and you owe $19k this is not a good thing. It is important to note that debt utilization is a serious consideration. As you lower your debt you are going to increase your credit score.

Finally, many consumers are unaware that 10 percent of their debt is based on taking on new credit. In other words, if you think avoiding all new debt is a good thing you are wrong. This does not mean you should take on debt just to do so, but don’t be afraid to open new accounts if the proper circumstances comes up.

Overall, there are some ways debt can drag down your credit score and other ways that it can be good for it. To play it safe, make sure you have open accounts, which you pay on time, but that your debt utilization does not get out of control. This will help to keep your credit score in the high range.

Do you know what your credit report looks like? If so, you are doing a good thing. If not, you are making a mistake. Believe it or not, many consumers have never laid eyes on their credit report. This is a bad mistake, and one that you don’t want to get involved with. It is very important for you to closely monitor your credit report. Does this mean you have to do so every month? Of course not. But most experts agree that reviewing your credit report on an annual basis is a good idea.

What are you monitoring? There is a lot to learn from your credit report. For one, you can see if anybody has opened accounts in your name. If your identity has been stolen, and an account has been opened in your name with your social security number, it will more than likely show on your credit report. In turn, you then have the chance to address the problem. But if you don’t monitor your report there could be somebody using your name and quite possibly damaging your credit score.

Mistakes can happen. And this is another reason why you should monitor your credit report. You never know when a creditor will mark your account past due for no reason, or leave an account open when it shouldn’t be. These are common mistakes, but by monitoring your report you can keep them out of your report.

If you are not reviewing your credit report once per year you should get in the habit of doing so. It only takes a few minutes to request your report and review it for mistakes. You will agree that it is well worth the time. 

When was the last time you reviewed your credit report? For many people, it has been years. Others, those who are smart, know that it is important to review their credit report at least once per year. While this may sound annoying, you have the right to access your credit report once per year free of charge. With this offer, why wouldn’t you take a closer look? You are not going to have to pay any money, but you may save your credit score in the long run.

Why do you need to regularly review your credit report? Simply put, mistakes can happen. The longer you let an error stay on your credit report the worse things are going to get. Believe it or not, this can happen to you. Many people think that they are immune to mistakes, but this is not the case. You never know when one of the three major credit bureaus will mix-up their data, or forget to make an important change.

If you find a mistake on your credit report you should get in touch with the proper bureau to file a dispute. It may take a couple of weeks for the change to take place, but this is better than letting it go. Remember, one error on your credit report can greatly damage your score. In turn, this will affect your ability to obtain a loan, and even if you can get one, you will be subjected to a higher interest rate.

It is important to get into the habit of reviewing your credit report once per year. You may never find a mistake, and this is a good thing. But if you find even one mishap it was well worth your time. You want to make sure that your credit report is 100 percent accurate. And the only way you can do this is through an annual review.