Credit is without a doubt the hot topic across the country. On the macro level (nationwide) we can't hear enough about the 'Credit Crisis.' On the micro level (you and I) it's interest rates that keep our tongues wagging and pocketbooks asphyxiating.
Some basics all ECONtrepreneurs and users of personal credit should know:
- Know your status. Before you start using credit of any type, get a credit report. The Fair credit Reporting Act guarantees you a free credit report from each of the three reporting agencies - Equifax, Transunion and Experian - every 12 months. Read more about it here. The only authorized source to get your free report under law is AnnualCreditReport.com. Delasol advises getting the reports separately from each agency; that way you can monitor your credit more frequently throughout the year. You will need your name (a no brainer), date of birth, address (current and previous) and Social Security number.
- Know why it's a big deal for you. The information in your credit report is used to evaluate your applications for credit cards, loans, insurance quotes, employment and renting or buying a home.
- Protect yourself against identity theft and loss of purchasing power.Once you have your credit report in hand, search for accounts you don't recognize and inaccurate information. If you find any, dispute the errors by writing a letter to the reporting agency detailing the inaccurate information; include copies of documents that support your position. If you suspect identity theft, visit the Federal Trade Commission's identity theft website.Monitoring your credit will without a doubt increase your ability to buy the things you want in the future; that's what your purchasing power is. If you are in the dark about your credit history and potential, you're limiting how far your dollars can work for you. ECONtrepreneurs exploit strategies where their money does the work for them. Good credit health is wealth in itself.
- Stay on top of the issues.News reports have picked up on the major credit card issuers' (Bank of America and Chase to name a couple) initiatives to changed the terms for tens of thousands of customers. People who have low card rates but carry a balance month-to-month are being penalized. Issuers are hiking up rates and demanding higher minimum payments from people with great credit and those with poor credit. While in many cases you may contest a rate increase, it is usually granted with the caveat to restrain from using the card further, and is based upon your credit history. If you use credit, use it wisely and don't spend more than you can afford to pay back in 28 days.
- Tell a friend. Word gets around. Helping others become savvy about their finances has positive effects on the whole community. Each one, teach one.
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