Ways to Protect Your Credit
Protect Your Credit With These Seven Effective Tips
In the current economic climate, credit is more important than ever in the process of lender decision-making. Significant advancements in modern technology, however, have made credit increasingly susceptible to theft, tampering, and breaches.
When our society relies so heavily on a form of financing that is rather susceptible to foul play, how do you protect yourself? After all, when it comes to buying a home and securing a mortgage, bad credit can make it difficult to get a decent interest rate, which results in higher costs for you.
If your credit score is too low, you may not be able to qualify for a mortgage in the first place. Most mortgage lenders have a minimum that borrowers must meet to work with them, so borrowers with below-average credit stand to gain the most by improving their scores. Even good credit scores can stand to save thousands of dollars by taking these steps to improve their credit scores. Increasing your score helps you qualify for a mortgage and improve your mortgage rate.
Seven Steps For Protecting Your Credit
Here are seven simple steps you can take to protect your finances and your identity.
1. Go Prepaid for Online Shopping
Using prepaid, loadable credit, or debit cards for internet purchases can add security to your finances. You can load an approximation to the card to cover the purchase in question, and after the funds have been withdrawn, banish the card for good. If you shop online frequently, you can also keep it around for future uses.
Likewise, you can use pseudo credit card numbers to mask your real numbers. Financial institutions such as Bank of America, Citi Bank, and Discover offer this type of service because if online hackers can carry false or mysterious identities, then you should be able to as well.
2. Check Your Credit Card Activity Often
You don’t have to wait for your credit card statement to come around through postal mail to know exactly what’s going on with your credit activity. You can log on to the credit card company’s website and observe the activity in real time. Forbes urges consumers to stay on top of their credit by checking their accounts on a regular basis. Of course, you will always see a virtual breakdown of purchases and payments that you have made in the past. If you notice any unusual or unfamiliar activity, it is advisable to immediately notify the credit card company.
3. Consider Setting Up Automatic Payments
Since your payment history is one of the biggest contributors to your credit score, consider setting up automatic payments for credit card bills to avoid late payments, which can significantly reduce your credit.
4. Use a Fraud Alert to Your Advantage
Fortunately, you have the option of placing a fraud alert on your credit report if you either sense suspicious activity or want to strengthen the protection of your finances. Credit bureaus often offer this feature free of charge.
After placing a fraud alert on your account, lenders must follow a stringent set of steps to verify your identity before granting loans or opening new lines of credit. This might be a bit of a nuisance but useful in the long run if a criminal attempts to steal your identity.
5. Know How to Identify a Phishing Scam
For many victims of fraud, the entire fraud process starts with a suspicious-looking email. In order to identify the scams these emails contain, follow these tips from Consumer Reports:
- Examine the sender. You should immediately take precaution with emails that originate from unknown or fishy sources.
- Study the content. Is the body of the email littered with grammatical errors?
- Determine the type of information requested. Avoid the email at all costs if it pressures you to provide extensive personal information such as your name, address, phone number, date of birth, gender, and more.
- Hover over links before clicking them. This will help you determine the real destination of the link in question. If you’re being urged to click a link originating from your bank or credit card company, visit their website instead and navigate to the webpage from there.
- Avoid emails that request money in return for even more money. This type of scam can take many shapes and forms.
6. Watch Your Credit Utilization Ratio
Aim to keep your credit utilization ratio low. Another big player in your credit score is credit usage. It’s recommended to keep the amount of credit used at 30% of your total credit line. So if your credit line is $1,000, try to keep your credit utilization at $300 or less.
7. Get a Free Annual Credit Report
Lastly, you should always take advantage of a free periodic credit report offered by AnnualCreditReport.com. Occasionally checking in on your credit report will keep you updated on any suspicious activity, and you can immediately report it to the credit bureaus and associated lending companies as soon as you notice it.
Dispute any errors on your credit report such as duplicate credit accounts or identity errors like misspelled names. Duplicate accounts can make it appear as though you have more debt than you really do, which can impact your overall credit score. You can dispute information like this by contacting the credit bureau.
Pro tip: Add your phone and utility bills to your credit report. Different programs are available that enable you to add payment history from phone and utility bills to your credit report. If you don’t have much history and want to build credit quickly, this is one way to raise your score.
The Chris Doering Mortgage Team is Your Guide to the Home Financing Process
We understand that buying a home can be stressful, starting with the credit preparation process. With the help of your team at Chris Doering Mortgage, we simplify the process for you, guiding you through each step of the way. Whether you are buying your first home or a vacation home, you should be well informed about the impacts of your credit score on the process as well as ways to improve credit before applying. Reach out to our team for expert assistance.