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Prevent Credit Fraud

How To Monitor Your Credit

Credit is an opportunity for success that bears the weight of a big responsibility. Credit is used for major purchases during one’s lifetime. The availability of credit and the cost of credit are determined by your Fair Isaac Corporation (FICO) score. Even if lenders approve you for a loan, your FICO score is the basis of what you interest rate will be for the new loan.

Generally speaking, credit scores ranges from a low of 300 to a high of 800. The three main credit reporting services, Equifax Inc, Experian PLC and TransUnion, each add proprietary scoring criteria to your FICO score and use that to establish your personal score. This explains why you may have slightly different scores with each credit service.

According to the Wall Street Journal, 58 percent of Americans have a credit score of 700 or more. The average national credit score is 723. The consumer must remember that your credit score is a very important score that is often accompanied by long and lasting repercussions on the lifestyle you choose to live.

There are 4 Basic Criteria that FICO Uses to Determine your Credit Score:

Payment History – Your payment history is evaluated by Fair Isaac. Important elements in your credit history include timeliness of payments for:

  • Credit cards
  • Student loans
  • Utility bills
  • Secured loans
  • Personal, unsecured loans
  • Other installment loans
Payments on these types of accounts are documented and considered by Fair Isaac.

Amount Owed – An analysis of your available credit to credit-in-use is an important consideration. If you are maxed out on balances, your rating will be lower than if you have low balances in relation to available credit.

Credit Experience – Fair Isaac considers the length of time you have had credit relationships with lenders. Fair Isaac also considers the length of time various accounts have had open balances. This aspect of the process works against young borrowers who do not have a credit history.

Types of Credit - The type of loans you have also plays an important part in your credit score.

These factors influence your credit score. The biggest risk of using credit is the exposure to fraud. Honest companies can make mistakes and hire untrustworthy employees who have access to your credit information. However, there are scammers who are professional identity thieves. There are a number of ways people can fall prey to this crime.

The most credible banks and credit card providers are constantly on the lookout for identity theft. At the same time, many credit monitoring services are fee-based and provided by third-party credit monitoring services and all three major credit rating companies.

Credit monitoring services do provide a service. In the truest sense, there are distinctions between credit monitoring and theft identity protections. Credit card fraud and identity theft are serious and larger problems than credit monitoring issues.

Paying a fee to have a party monitor your credit will not prevent identity theft. Theft protection providers offer a valuable service if you feel you are concerned about identity theft. Remember that identity thieves are professionals. They know how the game is played are affective at navigating the system.

The best defense against credit errors or unidentified charges rests with the individual. By checking your credit balances on a daily basis, you minimize the possibility of credit errors and identity theft. If you see errors, do not hesitate to contact the credit provider and file a query immediately.

Honest providers make mistakes. The longer a mistake takes to rectify, the harder it is to undo the damage. Never give up if a mistake is made. You must be persistent and only settle for the accurate outcome.

Honest mistakes can be difficult to unravel. Because of that, you should have a running log of all contact, the date, the time and the names of all persons to who you speak. This is important. You must be diligent.

Get Your Free Credit Reports

All Americans are entitled to a free annual credit report from each of the three credit rating companies. It is a good idea to get them at different times of the year; say one every four months. In this way, you can monitor your credit information in a cost efficient way and ensure that you are on top of not only account activity but also your credit balances. If you use a credit monitoring service, check references and customer reviews.

Another option available is to purchase a “credit-lock” from the credit reporting agencies. The cost can be as high as $10.00 per file. The lock prevents new lenders from accessing your file. Of course, they have the right to press you to release the lock or deny you credit until the lock is removed. However, people who have suffered identity theft often resort to this tactic until the accounts are corrected.

Credit is too important not to monitor. If possible, you should review credit card charges and bank charges every day. You will feel more secure if this is part of your daily routine. There is one thing to know about credit; if you take care of it, it will take care of you.

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