new years

Your credit score direct affects your finances. In addition to determining how much you will be paying in interest on a loan for your car, home, or even a credit card; a good score may even get you lower car insurance rates. Looking for a new job? Some companies will check your credit report, especially if you work with money at all.

However, your credit score is composed of lots of information, and with all of that, there is a chance of there being an error. Luckily you can get a free credit report from the big agencies, once a year. Now if you search for “free credit report” you’ll get a lot of sites. However, https://www.annualcreditreport.com/ is the official free site as part of the Fair Credit Reporting Act.

As part of my new year routine, I like to get them in January. Even if I don’t plan on making a large purchase in the next month, I want to be ready. It’s also a good first step if one of your new years resolutions is to improve your finances. Whether it be to save for a new house, pay down a credit card, etc. (A higher credit score can get you a lower interest rate on a credit card, making paying it down easier.

Unfortunately, about every other time I check, I see an error. Hopefully you won’t, but if so, lucky for you, it isn’t too difficult to fix the errors.

So here are the steps to check and see if you have an error.

So go to annualcreditreport.com.
Enter the information needed to verify who you are. This will include your:
- Full Name
- Address (previous address if you’ve liver their less than 2 years)
- Social Security
- Date of Birth
Request the reports you want. I always select all three, but you don’t have to if you don’t want to.
Review the reports.

When you get done, you’ll see a screen like below which will take you through the different reports:

What should you check in your report?

There are a few things I always check.

First, I check for errors in the credit statements. The two most important include:

Past due notices when they were not? Sometimes things don’t get reported, its important to fix these late payments will hurt your credit score. If you were past due, there is little you can do other than work on not continuing to have these.
Any extra accounts showing up? This has happened a couple of to me, usually from someone with a similar name, or who lived at the same address that I used to. I’ve caught a credit card which had over $30,000 used on it, and a property lien. This is also important to check to see if someone has opened an account in your name, in which case you are a victim of credit fraud.
Are closed accounts showing correctly? Did you pay off a student loan? The mortgage when you sold your house? These should be shown as closed.

Don’t worry if your credit used on your card isn’t showing, or that you paid off last months credit card. That info may not have been sent in to the credit reporting company yet, they do not update in real-time.

It’s important to know that each company reports data differently. Some will use just text, others will use color coded tables. Luckily they provide a key for you:

Hopefully yours is all green. The further down the list in this key, the worse. Try to avoid getting there if possible.

The next thing I look at is credit inquiries. When a person or company contacts one of the credit reporting companies they record it. Generally someone will go to one, but rarely all three, so this will be different for each report. Some checking is normal. For example when you go to get a loan (to buy or lease a car, rent a home), apply for a job, or a few other special cases. However, you should know when this someone is requesting a look.

If you look and see companies checking your credit, and you didn’t apply for them, someone may be attempting to steal your identity. You may think you don’t have anything, so it’s not a big deal, but it can follow you around for years, and it is worth investigating with a professional if you think it might be a real problem.

Finally I review personal information. This will include things like current address, other known names, etc. Each reporting company may offer different details in different ways, but that’s OK. Reviewing, and correcting, what you need to reduces the chances of future mistakes.

What’s not in your report?

The one thing you don’t see in your report is what your credit score is. This is not required by the FCRA. You can buy this from the companies if you want, and they will attempt to sell it to you. However, you are under no obligation to get it, so don’t worry about trying to.

While you’ve seen what goes into your score, you won’t know the number unless you order it. Luckily there are ways to get your score for free if you want/need it.

Credit monitoring/protection is not included either. The report allows you to manually review your report. It does not protect you, or monitor it for you. Please keep this in mind. If you don’t see any red flags in your report, you can probably skip it. If you do see it, then you might want to look into a service which can help.

As the new year comes, many people look to setting new years resolutions to make changes in their life. Almost of a third of people who make resolutions do so about weight. Over 40% of people make resolutions about money. Source

However within a month, almost half of the people will have given up on their new years resolution.

How can you improve your chances of succeeding at your new years resolution? Well, you improve the process by how you handle changes and set goals. The process for sticking with your resolution will work for dealing with work/school projects and other goals you’ll have to deal with in the future.

Make list manageable

Don’t go overboard with a bunch of resolutions. Instead select one or two that you feel strongly about. I’ve known people who make 10 resolutions, hoping that one or two will stick, but instead you are less likely to succeed. By focusing your efforts on one or two, you improve your chances of success.

Be specific

One of the biggest reasons for failure is setting a goal which poorly defined. The problem is they rarely seem poorly defined when we start.

“Getting healthy”, “Losing weight”, and “Getting in better at money” are all good starts, but they are hard to reach, because you never know when you are in better shape, lost enough weight, and are good enough at money. You can always get a little better, and therefore will give up as you’ll feel you can never reach that final goal.

Instead, be specific, using the SMART method: specific, measurable, achievable, relevant and time-bound.

Specific and Measurable often go hand in hand. “I want to lose my freshmen 10 I added.”, “I want to be able to bench press my body weight”, or “I want to pay off my Visa card”. Each of these is a specific and measurable goal.

Losing 10 pounds is easy to measure. You simply need a scale, and you can watch the weight go down as you make progress. A lot of time people don’t like working with numbers, but it really is important.

But make sure, any number you pick, is achievable, i.e. realistic. This often needs to go hand in hand with time-bound. If you’ve never lifted weights, saying you want to bench press 500 pounds, is not a realistic goal, especially if you want to do it within the year.

Instead, set a reasonable goal, that you can work toward. I like to set goals that are 3 to 6 months out. This way I can’t procrastinate, but I’m not going mad in setting it. It is achievable. You may need help in finding out what is achievable, especially if its something new. For example, if you want to pay off your Visa card, but you are used to living off of it, and only paying the minimums, paying it off may not be the most achievable goal. However, paying down a part of it might be. Check with friends, research on-line, or seek professional help if you want to make a big change.

Finally, pick a goal that is relevant. This is something that means something to you. Something you care about, is something you will stick with better than something that is arbitrary that you do because you think you need to, or you are pressured by someone else.

Make a plan

As the old saying goes, “People don’t plan to fail, they fail to plan.” It may be cliché, but it’s true. So break down your resolution into smaller goals, keeping in mind the SMART method.

Let’s say you want to get in shape, and lose 10 pounds. You’ve identified your big goal, but how are you going to make it. By setting smaller goals, you see yourself working toward the bigger goal. For example, you might specify that one week 1, you will sign up for the gym, and by week 2, you will be visiting said gym Monday, Wednesday, and Friday for 30 minutes. Week 3, you decide that your normal snack break you take at 3 PM, can be replaced with dry roasted nuts and a bottle of water instead of a candy bar and soft drink.

Each of the little steps is something that is specific, measurable, achievable, realistic, and time-bound. Using a calendar, or calendar software helps. I set up alerts within my Google Calendar to remind myself of when to drink my water, to help me stay on track – even now, after setting the goal several years ago.

Automate where possible

Using a calendar software, or your smart phone’s alarm is a great way to help make sure you are reminded. If you can automate the process, that much better. For example, if one of your goals is to save $1,000 this year for an emergency fund, you can determine how much you need to save each month, and have it automatically transferred to a separate account.

Join a group

It’s sad, but friends and family may not always be supportive. So find people who are. Whether it is an on-line group, or a local group. Studies repeatedly show that going to the gym with a friend increases the chances of you continuing. Likewise, if you have people who encourage you to save money, eat healthy, etc. you are more likely to do so.

Recover from mistakes

Changing a habit is hard. We never said it would be easy. And it’s not uncommon to miss a day going to the gym, forget to drink that extra glass of water, or have that impulse buy. Don’t beat yourself up over it.

Instead, realize it is a mistake, and move on. Learning to deal with small set backs is a big part of life. So pick yourself up, and work on your goal tomorrow, like today didn’t happen.

Time to Check your Credit Report