You can hurt your credit score in many ways. You can fail to pay bills on time, use too much credit at once, apply for a bunch of credit cards at the same time, etc. However, even if you are responsible with your credit you can still get into trouble. One of the easiest ways to hurt your credit report is to fail to keep track of your credit.
Why Keep Track?
If you do not keep track of your credit and some merchant makes a mistake in reporting to the credit agency, this mistake can be stuck on your credit report and eventually wind up affecting your credit score. It follows that in order to be truly responsible with your credit, must pay attention to the transactions that are recorded on your credit report.
On a more sinister note, if you do not keep track of your credit, you run an exponentially greater risk of being the victim of identity theft. The last thing you want is to receive a large bill from a credit card company with whom you have never done business. If you are keeping track of your credit and an identity thief does happen to target you, you will be better able to defend yourself and take the proper actions to mitigate, or even completely nullify, the damage.
Finally, it should be noted that the best way to improve your situation is to learn from your successes and your mistakes. This cannot be done if you are unaware of what those successes and mistakes are. By keeping track of your credit, you can monitor your financial situation and learn from it before you take future action.
Think about it this way: By taking the simple step of monitoring your credit, you make it easier to manage all of your accounts. You also open the door to lower interest payments, better loan terms, higher credit lines and your own peace of mind.
So how do you keep track of your credit?
Free Credit Report
The first step you can take to monitor your credit is to order a free credit report from each of the three credit reporting agencies. You are entitled by federal law to a report from each agency every year. However, since this is only useful once a year it is not a very effective method of tracking your credit. It’s a start, but not much of one. Even worse, the above site only gives you your credit report, not your credit score. There is no federal law that mandates that the reporting agencies give you a free credit score.
Thankfully, there are many other tools you can use to monitor your credit for free. At sites like Credit Sesame, you can even get a free credit report and score monthly along with these tracking tools.
One of the best ways to keep track of your credit is to have a central place to monitor everything at once. Anyone with more than a few lines of credit will attest to how daunting it is to jump from one bank site to another to another and so on, in order to make sure everything is copasetic. Eventually you grow weary of the journey, stop paying attention, and before you know it, you have a missed payment or a stolen identity. The best bet is to use a free service that culls all of your information into one place.
By using such a free service, you can also set up alerts that will be triggered when particular actions are taken regarding your credit. These services keep track of your credit in real time so you can instantly catch an issue before it begins to snowball. You merely maintain access to one site and you are always aware of all of your due payments and alleged transactions.
Know Where You Stand
You can get even more control over your credit by using tracking tools that use analytics that provide you with useful information regarding how you can improve your credit score. This is of course important for many reasons, and credit scores can even matter in the workplace too. These tools analyze your financial situation and compare it with the finances of other people in similar situations. The program then tells you where you could be doing better. This service will even track your credit life over time so that you can see when you were doing best and when you should have been doing better. You will be able to determine if you are paying too much on a loan, if a credit card is not working in your best interests, etc. This information can make a big impact on your daily life and your wallet.
Along with learning about where you can be doing better, you can also get recommendations on actions you can take to improve where you are lacking. With a recommendation service, you can get advice based on your goals. Sure, there are credit issuers that will give you similar advice, but they are looking out for their own interests and not yours. With a good recommendation service, the advice you get is not biased. The service looks out for your bottom-line, not its own. This type of service keeps track of the financial world as a whole and highlights things like loans with terms and interest rates that will be best suited for you. Essentially, this is like having a financial advisor that never misses a day of work, constantly keeps track of all financial goings-on across the globe, and only has your interests in mind. You really cannot beat that.
Need to Know
In the end, it is absolutely imperative that you maintain awareness of the state of your credit. You need one place to monitor all of your financial transactions. You need to be constantly aware of what is being reported on your credit report and you need to know your credit score. You need to know where you stand and where you could stand for improvement.
For more information on how to obtain all of these services for free, check out Credit Sesame.