In times of financial fraud, identity theft and overall unbalanced economy it’s too easy to lose points. If you’d like to keep your score just as it is, there are a few actions you could take. Check them out below and start keeping the most important number in your financial life safe.
Why should you protect credit score?
When you don’t protect credit score your life as an investor is in perilous danger. This number is one of your most important assets, both as an investor and as an individual who has financial needs. Neglecting it can lead to lasting repercussions that you could take months or even years of hard work to reverse.
Any type of lender uses your score to decide on interest rates and whether to give you a loan at all. Investors often need an investment loan purchase that could require a credit score of 680 or higher. With higher interest rates, the investment can become a lot less profitable.
Are you looking for a good credit card that gives you cashback, rewards and has little to not fees? Well, we’re sad to inform you that it also depends on your credit score. While there are great options out there, you won’t be able to get approval without the right numbers.
So there’s plenty of reason to start protecting (and increasing) your score today!
Best ways to protect credit score
The last couple of years have been critical for credit scores all over the U.S., with economic recession and massive loss of jobs, many people couldn’t keep up with their financial obligations. The numbers of identity theft and fraud are also skyrocketing, which means that we’re in greater danger than ever and must take active action to protect credit score.
Even if you’re experiencing loss in income you can take action! Check out our tips below, you’ll see many of them are really simple to apply.
1. Pay back bills on time
35% of your credit score is based on your ability to pay on time. This includes bills, such as electricity and internet, and any other debts you might have. Not only do late payments have a major impact on your score, they also remain on your report for the next few years. So you must avoid them at all times!
Any number of late payments can end up on your report, it all depends on which creditors report the information to agencies. These may include:
- Mortgage servicers;
- Credit card companies;
- Cell phone services;
- Landlords.
In case you’re running low on money and don’t think you’ll be able to make the payment, get in touch with your creditor. Many times it’s possible to keep the information from being reported with a partial payment.
2. Be careful of new credit considerations
Are you thinking about getting new credit, such as personal loans? Think again and weigh your options carefully. Generally, getting new loans affects your score badly, especially if you fail to pay on time.
Ten percent of your score is generated by checking how often you’ve opened new credit accounts and creditors have checked your report. While it’s important to keep an active credit history, doing everything at once can hurt you.
So be careful, since you know that bad records will stay there for years, it’s better to set things straight and only take out loans when you can actually pay for them with ease.
3. Review your credit reports every year
When it comes to frauds, such as identity theft, the sooner you realize it happened, the sooner you can protect credit score. That’s why it’s important to review your reports every year once you’re able to access the free copy you have a right to on all three reporting bureaus. Are you still in doubt on how to check this report? We have another article on the matter you can read here.
Hypothetically, imagine you get your report and notice a credit card you’re unfamiliar with or a loan that you didn’t take. That’s a sign of fraud or errors that have to be reported as soon as possible. Checking your report for fraud is an important part of protection.
Once you find out about mistakes, there are steps you can take to make sure lenders and creditors know that this activity wasn’t yours.
4. Keep your starter cards open
These starter cards, also known as credit building cards, are models that most people with low score can get. That means that most people have these cards laying around and even forgotten about even after getting a significant improvement in credit.
After you stop using these cards it’s common to close them, but that might be a bad idea for your score. While you have them open your credit limit is higher, which keeps you away from maxing it out accidentally. They also end up being part of your history, that is about 10% of your score.
Just be careful not to forget any old credit card bills that have to do with them, that would be counterproductive.
5. Keep extra security online to protect credit score
Do you have an online account? Considering that almost every transaction happens through platforms or apps the chances are high that you answered “yes”. While these accounts make life simpler and easier, they can also become a liability to anyone who wants to protect credit score.
It’s ideal to set up multi-factor ID, something that simple social media uses since forever, to help you protect your data. This way, online systems layer levels of protection that help you confirm your identity.
Some systems even have place confirmations to make sure your credit card or password wasn’t stolen and is being used elsewhere.
6. Use virtual card numbers
This is another step to protect credit score by using helpful online tips. In the past, you had to use your physical credit card number to shop online, which left a major flaw in most companies’ security. It created the ideal opportunity for scammers that invaded systems to steal card numbers and passwords and use them later.
That’s why banks came up with virtual dynamic numbers that are generated by an app at the time of the purchase. After you use them they stop being valid and even if a hacker manages to get it, it will be useless.
Using virtual numbers is the ideal way to stay safe from security breaches, hacks and other problems that are so common online.
7. Talk to your creditors when needed
Most creditors put procedures in place for people that wouldn’t be able to pay during the 2020 pandemic. That means that you can still get deals or negotiate partial payments for your debts, keeping you away from being reported to agencies.
Each lender has their unique ways of reporting payments in these cases. So keep a conversation going, you must be informed of everything to take the best financial decisions down the line.
Once you renegotiate your debts, take every possible step to keep up the payments. Otherwise, you might end up with much higher interests on the amount that’s left.
8. Use identity theft protection
With identity theft scams running rampant throughout the globe, it’s important to always be aware of who is using your data. There are even programs dedicated to monitoring reports 24 hours a day for suspicious activity. These identity theft protection services check when an inquiry is made or when your score changes to see things that are out of the pattern.
Credit bureaus and insurance companies offer their own theft protection to keep your score safe. There are also third-party providers that sell these services, so you might want to do some research before making any final decision to protect credit score.
Does credit monitoring affect your credit score?
These services watch your reports and check for activity that doesn’t match what you usually do. This generates doubt in many people that think they could affect your score, since they keep making inquiries for you.
The answer is: not really since these services generate soft inquiries, the type that appears on your report, but doesn’t affect the score. Unlike hard inquiries, the type that comes up when lenders check your report, they’re completely safe.
As soon as these programs identify suspicious actions, such as opening a credit account that you didn’t ask for, they warn you. Afterwards, you can get in touch with the financial company and fix the problem without much damage. It’s way better than waiting to find out after a year.
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