Protect Credit

Your good credit is like your good name. You need to protect it carefully.

A bad credit history can follow you for years, making it difficult for you to borrow money when you need it.
You can best protect your credit by paying your bills on time. This means creating and living within a budget.

Your credit history is contained within a credit report. You can obtain a copy of this report to insure the information contained on it is correct.

Rules for Protecting Your Credit

Rule 1: Pay your bills on time.

Rule 2: Establish a budget and live within it.

Rule 3: Limit the number of credit cards you have.

Rule 4: Don’t apply for too many credit cards at the same time.

Rule 5: Be careful if you must borrow to get out of debt. 

Rule 6: Shop around for the best deal.

Rule 7: Don’t increase your debt burden to pay off debts.

Rule 8: Don’t pay a finder’s fee to get a loan.

Rule 9: Don’t call 900 numbers to get a loan

Your credit history is contained within a credit report. A credit report lists personal information about you plus a list of all your obligations, past and present, for the previous 7 years. 

Information older than 7 years automatically drops off the history, to be replaced by new information. But if you have negative information on your report, 7 years is a long time to have it haunt you. And it’s difficult to re-establish good credit.

You can check your credit report for errors and correct the information.

Checking Your Credit Report

Credit reports are kept by companies called credit bureaus. If you’ve been denied credit and can’t understand why, or if you’re just curious about what your credit history looks like, you can obtain a copy of your credit report.

If you have been denied credit within the last 60 days based on information on that report, you are entitled to a free copy of your report. Otherwise, you may have to pay a nominal fee to obtain your report ($3.00 to $8.00 based on the State you live in and what company you order your report from)… but it’s worth it. Often there are errors in the data. A study found errors in almost half the reports examined. 

You can write for your credit report at the following addresses, but you should first call the numbers indicated for more information:

Equifax Information Service Center 1-800-997-2493
P.O. Box 740241, Atlanta, GA 30374-0241

Trans Union Corp. 1-800-888-4213
Consumer Disclosure Center
Box 390, Springfield, PA 19064-0390 44070

Experian Information Solutions, Inc. 1-888-397-3742
PO Box 740241, Chatsworth, CA 91313

If there is an error in the information contained in your credit report contact the creditor that reported it. If you can prove there’s an error, the Fair Credit Reporting Act requires the creditor to correct it. If, on the other hand, there is a dispute about the information, you may write an explanation which is attached to your credit report. 

If you still can’t resolve the problem satisfactorily, write to:

The Federal Trade Commission
Division of Credit Practices
6th Street & Pennsylvania Avenue NW
Washington, DC 20540

But remember, you can’t erase bad credit information that is true. You’re stuck with it for the next 7 years. So your best bet is to take care of your good credit.

Re-Establishing Your Credit

You’ll see an occasional ad promising to fix a bad credit history. Don’t be misled by this scam. There is no way to repair a bad credit history. Only time and 7 years of paying your bills promptly will fix your credit.

Wise Loan Shopping

Not all loans and credit cards are alike. Remember, if you take out a loan for $1000 you will not have to pay back just the $1000. You will also have to pay back all the interest over the term of the loan. So total cost of the money you borrowed will equal the original $1000 plus all the interest payments you made as well.

The amount of interest you pay, the size of your payments, and the length, or term, of your loan can make a big difference how much the loan costs you in the end.

When you borrow, shop around for the best deal.

How Your Monthly Payment Is Determined

Four things influence how much the money you borrow costs in the end: 

1- Annual Percentage Rate 
The amount you pay to borrow is quoted in many ways. But the only one that matters is APR. This is the true amount of interest you’ll pay per year, plus any fees divided by the term of the loan.

2- Length (Term) of Loan 
The longer it takes to pay off a loan, the more interest you will pay.

3- Size of Payment 
The larger your monthly payment, the faster you’ll eat away at the principal of the loan-and the faster it will be paid off. The faster it is paid off, the less total interest you pay.

4- Original Amount Of The Loan 
Even if all the terms are highly favorable, the more you borrow, the more you’ll still end up paying. It costs more in cold cash to borrow $100,000 than it does $1000.

Smart Shopping Tips

Tip 1: Limit your borrowing to the amount you really need. Save for what you want, rather than borrowing to have it now.

Tip 2: Pay off your loan as rapidly as you can.

Tip 3: Select the highest monthly payment you can afford.

Tip 4: Choose the lowest APR you can find.