Maintaining a good credit score is one of the single most important things you can do to ensure your financial health. Especially during tough economic times, it can be easy to let your credit card spending get out of hand. Dangerous spending habits will cost you extra money in interest fees and can have long-term consequences that can ruin your chances of purchasing your next car or home.
If you have credit troubles, an important first step is working with a banking professional who can help you get back on track. Rule No. 1 is to never be afraid to ask for help.
Smart Business spoke to Jerrie Cage of Comerica Bank about how to evaluate your credit report and maintain a strong score.
Where should someone begin when evaluating his or her credit?
Examine your revolving lines of credit. For those who don’t know, a revolving line of credit encompasses all items bought without cash that can be paid back in a few months. Mortgages and cars have terms and requirements and are not considered to be revolving. Most credit cards, however, are and it is a good idea to keep these in check. Take an inventory of the various credit cards you may carry, including charge cards for department stores, and eliminate ones you can do without.
By reducing your access to multiple lines of credit, you can not only track and control your spending habits better but also manage your debt. You should really only need one or two primary charge cards, and having fewer will force you think twice before you swipe the plastic on your next purchase.
How can you stay on top of your credit status?
People should know their current credit score and track this score from month to month. For many people, their credit score ends up being quite a surprise because they never examined it in detail before.
It is possible to obtain free credit reports from sites like mycreditreport.com, but this is often only offered once a year.
Regardless, taking advantage of free credit report sites is a great practice and can also answer important questions. For example, if you notice your credit score getting worse from month to month, chances are you’re doing something wrong or you simply have too much debt.
Pay attention to credit report red flags. Always check carefully for unfamiliar items on your credit report. For example, if you see a major furniture purchase and know it’s not yours, chances are you may be the victim of fraud or identity theft. In addition, you should check any new accounts to make sure that you were responsible for setting them up.