Staying on top of your personal finances is more than a matter of keeping your income larger than your expenses. In order to consider yourself financially responsible, you also need to have thoroughly organized financial records. This can get a little tricky because some of the most important information about your financial history is kept by companies over which you have little control. Your credit scores are a perfect example. Here’s what you can to to make them as healthy as possible.
If you’re young and relatively new to financial responsibility, you might be wondering why your credit scores are something you should care about. You’ll have fewer doubts after the first time you go looking for a loan in order to make a major purchase such as a house or a car. You’re going to have certain financial obligations in your life that require credit in order to meet. Credit always costs money (i.e. you have to pay for the privilege of borrowing it), and your credit scores have a direct and dramatic impact on just how much it costs.
How to Keep Track of Your Credit Scores
In the United States, there are three different companies that keep track of your credit scores. In order to make sure your credit is healthy, you’ll want to order credit reports from all three of them. This is not too much of a hassle; you can request all three reports by dealing with any one of the companies. Your first report of the year is free, so you can check up on your credit annually without spending any money.
On your credit reports, you’ll see entries made by any creditors with whom you have outstanding debts. Debts that you are not paying off properly will be flagged, and these bad debts make your score go down. It’s not uncommon for such debts to show up by mistake or accident on your part, on your creditors’ parts, or the parts of the credit reporting companies. Getting these mistaken entries resolved and removed from your record can go a long way to fixing a low credit score. Take each entry that you feel is incorrect and contact both the creditor and the reporting company in order to resolve it.
Understanding and Improving Your Credit Scores
You can take positive steps to improve your credit scores, too. Any time you make use of credit in a responsible fashion, it will have a positive impact on your scores. This is why so many people recommend that you open a credit card account even if you don’t need it. This is good advice; having a credit card or two that you pay off regularly will soon cause your scores to rise. Remember that you have to use the accounts in order to receive the benefit; it’s a good idea to use a card for run-of-the-mill purchases and then pay off your balance in full at the end of the month.
Building and maintaining healthy credit scores is a big part of making yourself financially stable. As you can see, the process is not that difficult when you’re properly informed. If you give your scores just a little bit of your attention, you can safeguard them and improve them quite dramatically over time.
