With the holiday season approaching, it’s as important as ever to make sure your credit is in good order. AARP has information and resources about managing debt, saving money and budgeting available on our website.
See Also: Quiz: Will It Hurt My Credit?
The economic downturn of the past few years has been difficult for all of us. In some cases you may have had to make decisions that have negatively impacted your credit.
Good credit history is a central part of making a successful personal and financial future. Good credit can give you the ability to purchase or borrow at lower interest rates leaving you more money to save for retirement or not depleting your retirement savings to pay for things if you are already retired.
Your Credit Report
Achieving healthy credit starts with reviewing your credit report. Your credit report gives a snapshot of your financial life.
What the credit bureaus do is reduce credit behavior into one number that’s supposed to tell them what kind of risk we are. The FICO score is the most widely used score and ranges from 300-850. The higher the number the better your credit, and this translates into better rates for you.
Because your credit score affects many aspects of your financial life, it’s important to check it once a year. It’s easy to do and it’s free!
By law you’re entitled to one free report from each of the three major consumer reporting companies every year – that’s three credit reports in total. Because you get three reports each year, you may want to space them out throughout the year instead of requesting them all at once.
You can access your report online for free. Be sure to be on the lookout for false offers to receive your report and score for free. Often, companies will market a free report and/or score, however only when you sign up for a monthly monitoring service.
A study done by the Consumer Federation of America showed that a high percentage of us are likely to find some mistakes in our credit reports. If it’s just a mistake – say, the wrong middle initial, or accounts that are still open that you thought you’d closed, a letter to the consumer reporting company (Equifax, etc.) should do the trick. Find out how to fix mistakes on your credit report.
If you find fraud – such as new accounts that you didn’t know about or big balances on your existing accounts – then you need to act quickly. You may be the victim of identity theft. Learn more about identity theft protection.
Managing your money is no easy chore and mistakes can prove costly. You may have questions about creating a budget, cutting costs, Social Security or the basics of your 401(k) plan. AARP offers a range of publications and online calculators to help. Find tip sheets to help plan your financial future.
[photo credit: 401(K) 2012's photostream]