By regularly checking your credit report, you're doing a
great job of managing your credit. It's a good way to stay
on top of things. And you know what else is smart? Being
aware of the most common credit pitfalls.
There are four credit "dangers" you should always have on
your radar. If you're not careful, these situations can
sneak up on you and lead to a credit disaster. So let's be
sure you know how to avoid them...
Unpaid bills
This may seem like a no-brainer, but you'd be surprised at
how many people don't realize that unpaid bills can hurt
their credit. If you skip payments on anything from your
mortgage or car loan—to a $25 credit card
payment—your credit score can drop. Even late
payments can negatively affect your score.
The biggest culprit for many people is an unpaid medical
bill. It's easy to see how it happens: you assume your
insurance company is taking care of the bills and they
don't get paid. It's usually a simple mix-up of what your
insurance company does and does not cover.
Unfortunately, this confusion can result in a collections
record on your credit report (and those stay on your report
for at least seven years). So it's important to fully
understand your insurance coverage and make sure your
medical bills are paid. And if a collections account
appears on your credit report due to a mistake, be sure to
work with the parties involved to get the issue resolved.
Identity theft
When someone steals your identity and goes crazy with your
credit—it can mean chaos for your credit report. It
is a real problem these days. But if you know how to
protect your identity, you have a better chance of
protecting your credit.
Are you taking steps to cut down on your risk? You should
start with the following: shred everything with your name
on it before you throw it away...only use your credit card
on websites you know are safe...don't carry your Social
Security card in your wallet...and consider paying your
bills online or with automatic payment (less mail for
thieves to get their hands on).
You should also consider signing up for credit monitoring.
It's an easy way to keep a close eye on any changes to your
credit.
Divorce
After the hassles of going through a divorce, the last
thing you need is to have your credit suffer because your
ex-spouse is racking up credit card bills or missing
payments. So get your credit report and make sure all joint
and co-signed accounts from your marriage are closed or
refinanced as soon as you can.
Judgments
The verdict is in: most judgments such as small claims,
civil suits and tax liens are guilty of tainting your
credit standing. These can remain on your credit report for
seven years or longer. And that can make it harder for you
to get the best interest rates on loans.
You see, credit doesn't have to be scary. The more you
know, the easier it is to stop things from sneaking up on
you.
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TransUnion's TrueCredit empowers consumers to manage their
credit health, providing information on credit-related
issues that range from the significance of a credit report
to identity theft protection. TrueCredit's offerings
include educational materials, free monthly newsletters and
online products, including credit reports, credit and
insurance scores, credit monitoring, debt management tools
and identity theft insurance services.
http://www.truecredit.com/
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