The tinsel is packed away, and those holiday credit card statements are rolling in. January is the perfect time to pull your credit report to assess where you stand after the season of giving and plan how to use credit in the new year. A credit report check will help you spot any errors, know where your credit stands, and make plans to improve your credit in the New Year.
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Understanding Your Credit Story
Your credit report is like a financial diary – it tells the story of your borrowing history. Thanks to recent changes, you can access your credit report weekly from each major bureau through AnnualCreditReport.com. This increased access helps you spot and address issues quickly.
What to look for:
New Accounts You Didn’t Open
- Most importantly, review the names of creditors or institutions and match them with any accounts you’ve opened. If an account was opened when you didn’t apply for anything, it’s a red flag. New accounts often show a balance of zero or low charges initially, so watch for this to catch fraud early.
Incorrect Balances
- Then, match the balances on your credit report to your most recent account statements. Check your credit cards, loans, and closed accounts for balances that don’t match recent payments or don’t reflect balances you’ve already paid off.
Late Payments You Know You Made on Time
- Next, review bank statements, payment confirmations, or online payment portals to verify the date and amount of your payment. Look for discrepancies in due dates, payment dates, or amounts during your credit report check. If the same creditor has repeated late payment errors, it could indicate a systemic issue.
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Unfamiliar Addresses or Employers
- Unfortunately, unfamiliar information could mean someone has used your identity to open accounts, apply for jobs, or take out loans. Compare the addresses and employers on your report to where you’ve lived and worked. Repeated unfamiliar addresses or employers might indicate ongoing fraud.
Old Accounts that Should Have Fallen Off
- Furthermore, a credit report will not reflect your financial history forever. Certain accounts, particularly negative ones, have a time limit for how long they can legally stay on your report. So, if you notice old accounts that should have been removed but are still showing, address them promptly.
- Also, check the “Date of First Delinquency” (DOFD) or “Date Opened” to determine when the account should have been removed. Determine if the account is negative or positive to understand its expected lifespan on your report.
Taking Action
Found an error? Don’t panic. Document everything and file disputes with each credit bureau (Experian, TransUnion, and Equifax) showing the errors. Keep copies of all correspondence and follow up regularly.
Here’s some timely information on how to stop financial scams before they happen.
Smart Credit Habits for 2025:
Set Up Payment Alerts
- All in all, setting up payment alerts is a simple yet powerful way to avoid late fees and protect your credit score. Then, never miss a due date by setting alerts 3-5 days before payments are due to prevent the stress of missed deadlines.
Use the 30% Rule
- In the same way, keep credit utilization under 30% of your available credit. For example, if your credit limit is $1,000, aim to keep your balance under $300. Staying within this range shows lenders you’re using credit responsibly, which can positively impact your credit score. Also, consider requesting limit increases on existing cards rather than opening new ones.
Think Twice Before Closing Old Accounts
- Similarly, the length of credit history matters. Older accounts help demonstrate a long-standing, reliable borrowing record, which is key for lenders. Therefore, before closing an account, consider whether the benefits outweigh the potential impact on your credit, such as avoiding annual fees. Keep old accounts open with small recurring charges to maintain account activity.
Monitor Regularly
- Finally, review your credit report monthly, as you would with other financial statements. Regular checkins will inform you of any inaccuracies or suspicious activity and help you track your progress in improving your credit.
Your credit report isn’t just a number – it’s a tool for building your financial future. Understanding and maintaining it is crucial for long-term financial success.
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