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Credit scores are getting more & more important

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By Gary Boatman
Wednesday, July 9, 2014, 12:01 a.m.
 

Everyone has an important number that they should know and protect.

That's your credit score.

Even if you don't plan to borrow money, it's important to know your credit score.

More and more insurance companies use credit scores to determine how much the premiums will be for your auto and home insurance.

They believe credit scores reflect how financially disciplined a borrower is and may make people less likely to file a false claim.

Many employers check credit records when deciding who to hire.

They view applicants with higher scores as more responsible and trustworthy.

If you are renting an apartment, expect to have a credit check done on you.

The amount that you have to deposit for utilities and other security deposits can be influenced by your score.

There are three major credit bureaus.

Their records will be similar but not identical.

That's because some creditors report to only selected ones, while some report to all three.

The bureau records will show how many accounts you have, type of account, payment history, credit limits and closed accounts.

Records are usually reported for seven years, even after an account is closed.

A recent Federal Trade Commission report found some discouraging results.

Five percent of Americans have at least one mistake that could cost them if considering a major purchase.

Twenty-five percent have a mistake that could affect them down the road.

Twenty percent had errors corrected after a mistake was disputed and five percent had their credit score improve 25 points after the correction.

That could save you a lot of money.

You are entitled to a free credit report every 12 months from all three major credit unions.

To get your copy, visit www.annualcreditreport.com - an official government website.

You should get all three reports and check them for accuracy.

If you find a mistake, write to the credit bureau and dispute the error.

You cannot have something removed that is correct, so if you were really past due, it will remain. You may discover identity fraud if there are accounts showing that you did not open.

If you had disputed a charge with a creditor it can be challenged.

Sometimes you can post explanations to try and mitigate a negative entry.

One area that causes major concerns for people and especially seniors is medical debt.

Insurance companies expect people to pay their co-insurance and deductibles.

Remember, a Bronze plan under Obamacare is designed to pay only 60 percent of the cost.

If you do not pay, it could go to collection and end up hurting your credit score.

Medical expenses are different from most purchases that we make because we often don't know the final cost when we consume the service.

They are also often some of the most expensive things that we buy.

Sometimes there is confusion about what is the actual out-of-pocket cost that we are responsible for.

If you require an expensive procedure or healthcare expense, you need to stay on top of it from the beginning.

Do not ignore these charges.

Check with your insurance company to see if they are correct.

Review your itemized bill to be sure that you received all of the services you are being charged for.

Sometimes charges can be negotiated down and request a payment plan if you cannot pay the full amount.

Small monthly payments can keep a charge from becoming past due and damaging your credit report.

Remember if delinquent charges get filed on your credit report because that will have a negative impact for seven years even if you paid them off. Keep them from appearing in the first place.

Be sure that you take steps to reduce ID theft since this will also affect your credit score.

With a lot of hard work, you can get these mistakes corrected if you did not make the purchases.

Guard your Social Security number and shred any sensitive documents.

By monitoring your credit report on a regular basis, you can sometimes stop ID theft easily before it does too much damage.

Your credit report is a very important part of your financial health. Monitor it and treat it that way.

Gary Boatman is a certified financial planner and local businessman who is president of the Monessen Chamber of Commerce.

 

 
 


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