The Top 5 Reasons To Check Your Credit Report

I check my credit scores and reports once a week. For a while, I checked daily, but that seemed a tad excessive. OK, maybe it was seriously paranoid. Alright, fine, I basically did nothing else. I went crazy. I wanted my reports CLEAN!

It’s true, I was in the process of cleaning my credit reports up. I spent a lot of time and a lot of effort learning how to get that done. And after I had reached my goals, I got kind of sick of it. Always trying to figure out what had changed, what was good, and what was bad. Not an easy task.

So, for a couple of months, I quit watching. Just let it go, pay your bills on time, and kind of relax. Then I got the letter…

Yep, Equifax wanted me to know that there had been a negative on my report. A collection agency had reported to my credit report for someone else’s utility bill in another state. I had never lived in that state, or gone by that name, but they accused me. So, I pulled my credit.
It wasn’t just one. I had three new negatives on my report. One, as I mentioned, wasn;t mine. The other two were. But, they were old! Also paid for, but that didn’t matter. One was a car loan I had paid in full 8 years earlier. The other was for a traffic ticket I actually contested in court. Since I had a copy of the car title, and could get a copy of the court record, those were easy to fix. They went away in a couple of months. But the other, the false claim, took 6 months and the threat of legal action before the collection agency would back off.

At the time it happened, it didn’t really matter. I was in good shape financially, and didn’t need to buy anything on credit. But what would it have been like if I was trying to buy a car, or a house? I wouldn’t have been able to. And, by the way, my credit scores went down by 110 points.

So, now I check once a week. If something shows up, I want to know about it. More than that has no purpose, and longer doesn’t give me the reaction time I need. But, it isn’t just about the invalid credit reporting. There are actually some really good other reasons as well:

1) It is an easy way to detect identity theft. If someone gets a hold of your SSN, in example, and opens a credit account, you will see it quickly and can get it cancelled before they do damage.

2) It is a great way to see who is checking you out. Any pull against your credit reports will show up as an inquiry. It is always nice to know that someone has done that illegally.

3) Your creditors may do something wrong. They have good intentions, but showing you as late, even once, can cause a 60 point drop in your scores.

4) Bad things could go away. If you have had late payments, collections, or defaults in the past, they will fall off over time. If you are actively working on the problems, they might go away much sooner. And THAT is a good feeling.

5) Because it is still kind of fun!

Credit is still kind of a big game to me. The rules are vague, and if you play hard you can win.
My recommendation? Buy into a service that let’s you check your credit, and use it. Over time, it can save you a ton of money, and a ton of time.

Why Do We Need Credit Education?

I was thinking about the credit crisis in the US today, and I think the experts are wrong.
When you read about the problem, the concensus seems to be that we use charge cards too much, that the government is encouraging the public to spend through lower interest rates rather than save money for the future. We read of evil banks, dishonest mortgage companies, and credit card companies charging outragous fees, all trying to take your hard-earned money away from you.

Then, as soon as we get in trouble with credit, we have someone bail us out. Credit counseling companies, bankruptcy courts, even the government trying to make sure that your mortgage doesn’t get called in. And as soon as one problem is fixed, we go out and make it worse by charging something else.

Now, don’t get me wrong, I believe in credit. When you are buying a house or car, I think credit is a great thing, as it allows you to extend your earning power to buy something you otherwise wouldn’t be able to get. I also think a credit card is great if used properly. If you are travelling, or have a sudden problem crop up, credit is a wonderful thing to have. But most of us don’t stop there. We buy expendable goods (Food with credit? Yep, GREAT decision!), so that the price of an item is severely inflated. We charge way more than we can possibly pay back in a timely fashion. And then, when we are paying hundreds of dollars a month in interest, we wonder how we got into this position!

Indeed, I think the experts are wrong. They blame financial institutions, or the government, but the real culprit is a lack of credit education.

I’m 42 years old. When I went to high school, they taught me how to balance a check book. I have a kid in high school. He just learned the same thing. Now, honestly, how many people do you know that still write checks? I don’t even know where my check book is! And even if I did, my debit card is just too handy.

So we sit here handing out credit cards to young adults in college, and they have no idea what an interest graph looks like. Or that interest is usually paid first on a loan. Or that a missed payment increases your rates. They don’t get it!

When I was 21, I got married. Prior to that, I lived in a house with an under-the-counter fridge, a pot, a skillet, and a chair. I was pretty well off! Then, my new bride moved in. Wierdly, she wanted cold food and clean clothes! Women…

So, off we went to Sears, where, wonder of wonders, they gave us CREDIT! We got a fridge, a couch, and a washer and dryer. Just 21.99% interest! Only going to take 5 years to pay off! FREE for 90 days!

My credit debt outlived the couch. It nearly outlived the marriage. But, I learned the hard way.

If only our kids didn’t have to do that.