Keeping up with your Credit

By Miranda Marquit

Many consumers see a "good" credit score as a destination. They hope to raise their scores in order to save money on insurance rates and get the best deals on their car and home improvement loans. While aiming for a good credit score is a good idea, the reality is that your work isn't done just because you've reached a certain point. If you aren't careful, your good credit score could disappear.

Gerri Detweiler, a consumer credit expert with Credit.com, offers the following tips for maintaining your good financial reputation:

Double-check medical bills

"After you see a provider, follow up to make sure there are no outstanding bills," says Detweiler. She says to read the Explanation of Benefits that comes from your insurance company to see if you are responsible for a portion of your bill.

"If you owe money, but don't get a bill from a provider, follow up," she continues. "Medical collection accounts are one of the top reasons consumers who otherwise have good credit scores end up with damaged credit."

Keep an eye on closed accounts

"If you close a cell phone account, end cable or satellite TV service, or cancel a gym membership, make sure to follow up to resolve any remaining charges," says Detweiler. She also recommends keeping a copy of the final statement that shows your balance at zero, so that you can use it as evidence if a problem crops up later.

"Keep the copy indefinitely," she says. "We've heard from consumers who were contacted by collection agencies two or three years after they closed an account about a remaining balance that supposedly went unpaid, but that was properly discharged."

Watch credit card balances

Most consumers know that they need to keep making their bill payments on time and in full if they want to maintain good credit.

However, Detweiler says that it's also important to pay attention to your credit usage.

"Most credit score models look at the utilization ratio on your revolving accounts," she points out. "If your balances start creeping above 20 to 25 percent of your available credit, it will probably negatively affect your credit scores."

Check your credit report

Regularly check your credit reports to make sure that there aren't errors. Mistakes can be costly over the life of a loan. You are entitled to one free credit report each year from each of the major bureaus. You can access your report through AnnualCreditReport.com. Check for mistakes, and then have them corrected so that your credit report accurately reflects your situation.

Bottom line

Your credit requires constant care and nourishment. Every few months, take stock of your situation and make it a point to fix any problems, pay down debt, and ensure that you don't have any outstanding bills. Pay a little bit of attention to your credit now, and there is a good chance that you won't have to worry about solving big problems with your credit score later.

Sources

Interview with Gerri Detweiler, Credit.com

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