A Number that can Change your life -

May be not changing your life, but is some what important financially. Article from USAA June Magazine.

May be you pride yourself on your high credit score. But have you checked it lately? Bad credit scores happen, sometimes through no fault of your own. May be a department store makes a mistake recording one of your payments. Or you fall prey to identity theft. Your score can take a nose dive when you’re not looking.

It’s your job to maintain that super score by continuing good financial habits. Checking it regularly and reporting any fraudulent activity.
And if your score’s not so great, now’s the time to start repairing it. Why? With a good score, you may get better rates on loans and insurance, saving you money in the long run. Plus, potential employers can request reviews of your credit records when you’re job hunting.

So make sure you keep that score stellar. Here’s how

1. Know what the numbers mean. While lenders can choose from several different available scores, the most prevalent is known as a FICO score, for the Fair Isaac Corp. that developed this system. While a perfect score of 850 may be a bit much to shoot for, CERTIFIED FINANCIAL PLANNER Practitioner Clare Stenstrom recommends 780 as a suitable target score.

2.Review your credit report. Your credit report is available from any of the three major credit reporting agencies – Experian, TransUnion and Equifax. Federal law allows you to get a free report form all three once a year. The easiest way to obtain it is to visit the secure site annualcreditreport.com, where you’ll likely have to answer a series of security questions to retrieve your report. Stenstrom suggests getting one free report from a different agency every four months – an easy way to cross-check for mistakes. You’re also entitled to a free report if you’ve recently been turned down for credit, employment or insurance based on credit information, or if you’re a victim of fraud.

3.Report mistakes and outdated information. Your credit report contains all sorts of information, including personal data, employment history and, of course, your credit activity. “Sometimes an individual’s credit bureau information includes obsolete or inaccurate data that can be investigated and correct.” Say Candy Wright, a counseling manager for the nonprofit credit counseling agency GreenPath. “Correcting mistakes can quickly better a credit score.” If something’s amiss, contact the credit bureau, which is required to investigate and respond within 30 days. To hedge your bets, send all correspondence via certified mail.

4.Pay Current bills on time. Staying on top of your regular, incoming bills has the single greatest effect on your score. Currently, under the FICO system, 35 percent of the number is derived from how well you pay your bills on time. For more, see fico.com. If you’re more of a free spirit and come within a day or two of the due date, look into setting up automatic payments for recurring bills. “The idea is to always pay off any bill within 31 days of the due date,” says Stenstrom. “Not only can a late payment for anything – from credit cards to traffic tickets to library fines – damage your score, some credit card companies may raise your interest rates, as well.”

5.Pay down debt. “Lenders compare your debt-to-income ratio to determine the amount of money you can borrow for a loan,” says Wright. “Excessive debt will lower your credit score and reduce your buying power.” Look at the balance you carry on a credit card versus its limit. For example, you might have a balance of $4,000 on a card with an $8,000 limit. That’s a 50 percent ratio, and the higher the ratio the bigger the drag on your credit score, as it accounts for 30 percent of your FICO score. You should strive to use no more than 30-percent of your available credit; so on that card with an $8,000 limit, your goal would be to never exceed $2,400 on your balance. Your next goal would be to get rid of that debt altogether.

6.Use credit cards responsibly. Granted, responsible credit card use can help build a solid credit history, but reckless credit card habits can destroy it. Not all of us are built to handle credit cards responsibly. If credit card debt has sunk your credit score, grab the sharpest pair of scissors within reach and slice up the cards. Consider keeping one card to help rebuild a solid credit pattern. Do keep the accounts open, though. They can help establish a long credit history and, in turn, help rebuild your credit.

7.Consider a credit monitoring services. See if your bank offers a monthly monitoring service. This can help you keep tabs on your own account activity and spy any mistakes or fraudulent activity.

8.Don’t fall for credit repair scams. If you have a bad credit score, chances are good you’ve been approached by companies pushing credit repair services. Their promises vary and can border on outlandish, from charging you a fee to fix your credit to magically “erasing” your bad credit. Grab your wallet and run. For one thing, if you become involved in any illegal activity – some companies promise to give you a new credit identity, for instance – you could face criminal charges. Moreover, you shouldn’t have to pay a single penny to restore your good credit. Whatever you need to do to repair your credit, you can do yourself for free. So, if you’re started to stay on top of your current bills, to correct mistakes in your credit report and to reduce debt, you might wonder how long it should take to see upticks in your score. Probably a few months, although major credit overhauls will likely take several years. Again, checking your credit report every few months lets you track your progress.