Self-Check: Maintaining a Healthy Credit Score

By Mike Elton, Advantage+ President

This is part of a series of blogs created by Advantage+ to help small-business owners manage

their companies – and have fun doing it.

I’m sure you’ve heard advertisements for services that monitor your credit report. There are

many of them out there, and while we’re not here to comment on them one way or another, it’s

helpful to understand how they work.

In a nutshell, these services watch for suspicious activity or abnormalities in your credit report

and then alert you when something looks amiss. In some cases, the services will even resolve the

issues on your behalf. Most of the time, these services charge a fee for what they do.

But many people don’t realize that they can do their own credit monitoring – and for free, no

less. Federal law requires each of the major credit-reporting agencies – Equifax, TransUnion and

Experian – to provide you with a free credit report at least once every 12 months. If you’re not

sure where to start, we recommend Experian.

Now that we’ve established that you’re entitled to a free copy of your credit report, you might be

asking yourself: Once I get my report, what am I looking for?

Regular inspections of your credit report enable you to double-check that all the lines of credit

shown are legitimate. Most people don’t find anything out of the ordinary. But, if you do detect

something wrong, you should take immediate action. You can work with both the credit-rating

agency and the lender in question to dispute any erroneous charges and file a claim indicating

that they’re fraudulent. Just as with illnesses, early detection almost always makes for a faster

and more favorable resolution.

You know the old adage that says nobody’s perfect? Lenders or billing parties are no exception.

Sometimes they simply make a mistake. Whether they claim you owe more than you actually do,

that you’ve missed payments when you really haven’t or whatever else the case may be, the

same rule applies here as it does with fraud: You can’t fix what you don’t know. Mistakes can

not only cost you money, but also ruin your ability to borrow in the future. The bottom line: Find

mistakes and fix them fast!

Your credit score is very important. Why? It’s a key factor used to make almost all lending

decisions, from opening a department-store credit card to obtaining a mortgage. By simply

monitoring your credit report, you can see firsthand how your borrowing and payment habits

affect your credit score – both positively and negatively. And once you’re armed with this

knowledge, it may motivate you to make better-informed, credit-smart decisions.

So here’s the primary takeaway: Make use of this great tool to help you maintain a healthy credit

rating. Since it’s available for free, you have nothing to lose – and a lot to gain!