As Winter departs, a number of you will go through the process of Spring cleaning. Traditionally this includes sprucing up your residence, organizing an overcrowded closet, and taking spiritual inventory as Easter/Resurrection Sunday approaches. I’d like to recommend that you also include your credit as part of your Spring cleaning list.
Here are three reasons why you should Spring clean your credit:
- Bad Credit Costs You Money. Lending institutions are making billions of dollars off of customers with bad or marginal credit. Unfortunately, too many people have been conditioned to think that if you go through a financial challenge, there is no way to recover a good credit rating. This couldn’t be further from the truth. Don’t allow bad credit to cost you thousands of dollars more to purchase an automobile or even hundreds of thousands more to purchase a home.
- Bad Credit Costs You Job Opportunities. Whether you like it or not, some employment opportunities take into account your credit rating for consideration. I have had clients who were unable to qualify for certain employment positions due to their credit scores. I don’t want this to happen to you.
- Bad Credit Costs You Peace of Mind. Bad credit robs you of peace of mind. Any time you get nervous about making a purchase or applying for insurance or credit cards, you have officially entered the peaceless mind club. Even if you don’t plan on using credit, it is still a good idea to resolve any issues so you are in a positive position for the future.
Going through the Spring cleaning process isn’t difficult. It just requires some motivation, education, and persistence.
Allow me to share five steps to assist you with the Spring cleaning process:
- Survey the Past Damage. In order to move forward, you need to know where you currently stand. Order copies of your credit reports from www.annualcreditreport.com, www.myfico.com, or www.creditchecktotal.com. You can obtain your reports from Equifax, Experian, and TransUnion. Print or save copies of your credit reports and review for errors.
- Check the Expiration Dates. By law, negative records can only remain on your credit reports for 7-10 years. The length of time is dependent on the type of record. Review each of the negative record on your report and highlight when each should expire from your report.
- Dispute Errors. If you find inaccurate information on your credit reports, you have the right to dispute these errors. You will have to send a separate dispute letter to each of the three credit bureaus–Equifax, Experian, and TransUnion–to correct the mistakes. Each bureau has 30 days to investigate and determine the validity of the request.
- Re-establish Credit. One of the top mistakes people make is to assume that eliminating the bad will automatically lead to an increased score. You have to have positive credit reporting in order to see a score increase. If you need to re-establish credit, consider opening an unsecured or secured credit card. Keep your balances low and ALWAYS pay your bills on time.
- Monitor Your Progress. In a time where identity theft is running rampant, signing-up for a credit monitoring service might be a worthwhile investment. A number of these programs offer you unlimited access to your credit reports and scores, identity theft insurance, ongoing monitoring, and more.
Although it might not be the most glamorous task on your Spring cleaning list, taking time to address your credit will reduce the amount of money you spend on certain goods and services, position you for job opportunities, and create a peace of mind for you and your family.