The end of 2017 is approaching fast—that means the streets here up north will soon be covered in icy snow, and Christmas music will be filling the radio stations around the country.
But the end of the year is also a great time to take a few minutes to check-up on your finances and see how this past year has treated you. It’s also never too early to start preparing for next year.
Luckily, we live in the age of the internet where checking your financial health does take just a few minutes—much better than those long doctor visits to check on your physical health.
Today, I’m going to give you a couple easy ways you can track your credit health—which is one of the most important aspects of your finances.
First things first, you’ll want to see what your credit score is. You’re entitled to one free credit report from all three major credit bureaus every year.
This, of course, doesn’t really help unless you understand what your score means.
Here’s a very simple explanation of what exactly your credit score is made up of, and how it differs from your credit report.
Your credit score is typically based on five key components. Your payment history makes up 40 percent of your score, while credit utilization is 20 percent. The length of your credit history contributes 21 percent, and total amount of recently reported balances is 11 percent of your score. Finally, new credit accounts are responsible for five percent.
Your credit report is a reflection of these percentages. It’s like a report card for your financial behaviors. It’s generated from updates sent by lenders to at least one of the three credit reporting companies.
Any negative information that gets sent by these lenders typically remains on your report for seven years and sometimes longer.
If you’re curious to see how certain financial decisions will affect your score, TransUnion offers a credit simulator as a part of their credit monitoring service (which I’ll talk about below).
2. Dispute any mistakes
If anything on your credit report looks a little funky, or you’ve paid something off and it’s not reflected, you can easily dispute those mistakes with the three major credit bureaus.
TransUnion’s online form makes it particularly easy to dispute a claim on your report. After submitting an online report, you should hear back within 30 days. Before you submit your dispute, keep in mind that you will likely need evidence supporting your claim that your credit report contains erroneous or fraudulent data. For example, in order to challenge a late payment on your report, you would need statements from your bank showing you made that payment on-time. Alternately, if someone fraudulently opened an account in your name, you may need a police report or other evidence proving that somebody else used your identity to open the account.
3. Set up credit tracking
Earlier this year, there was a large and widely-reported data breach, in which hundreds of thousands of American’s had their personal information leaked to potential hackers and cyber criminals. Attacks like these are, unfortunately, a very real reality in our technological age. This is why credit monitoring is becoming more popular—and vital.
It’s a good time to ask yourself if you need a credit monitoring service. If you can afford it, the answer is a resounding yes.
TransUnion offers a credit monitoring service for $9.95 a month, that can help you watch your credit and make sure no activity done by someone else in your name ends up seriously damaging your credit.
With TransUnion credit monitoring, you’ll be alerted of any major changes to your credit report. In addition, you’ll be alerted if someone applies for credit in your name.
Unlike the one-time a year report, you’ll receive unlimited access to your TransUnion credit report and score.
To learn more about TransUnion’s credit monitoring services, read our review.
If you are alerted to an unexpected change in your credit report, you’ll have access to 1-Touch Credit Lock. This which will freeze your TransUnion report.
As I mentioned above, you can see how your credit score will change with TransUnion’s score simulator.
Maybe you want to pay off a credit card, buy a house, or want to apply for a loan. You can see how each of these choices will affect your score.
Finally, with TransUnion’s credit monitoring service, you have access to educational tools that can help you manage your credit score in a responsible way.
In addition to the Score Simulator, you’ll have access to TransUnion’s Score Trending feature. This is an interactive graph of your score history over time. So, you can see how your score changes daily, as well as over longer periods of time.
As 2017 comes to a close, take a few minutes to look at how your finances have fared over the last year. You’ll be able to tell if you need to make adjustments to your spending habits.
If you need to, sign-up for credit monitoring, that way you can keep better track of your credit next year.
- Do You Need A Credit Monitoring Service?
- Why Is My Credit Score Different Depending Where I Look?