ELFI Credit Series: 5 Habits For Good Credit HygieneDecember 17, 2019
Last Updated on January 28, 2022
Whether you’re just building good credit for the first time or you’ve spent years diligently maintaining it, safeguarding your credit is key. Fraud, identity theft, and credit reporting errors can threaten your credit health — adopt these habits to protect yourself.
1. Check your credit reports at least yearly.
You can get one free credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) at annualcreditreport.com.
If you’re applying for credit — like a mortgage, auto loan or student loan refinancing — get all three reports at once and compare them. This gives you visibility into everything potential creditors could see when they pull your credit.
If you’re not applying for credit within the year, space out your free credit reports by pulling one every four months (mark it in your calendar as a reminder). This will help you keep tabs on your credit throughout the year.
Learn More: Don’t Just Build Good Credit — Maintain It
2. Dispute any errors you find.
Credit reporting errors are unnervingly common and can jeopardize your credit health – and they’re more common than you might expect. According to CNBC, 34% of Americans found a mistake on their credit reports between February and April 2021.
When you pull your annual free credit reports, check them carefully for mistakes. The Consumer Financial Protection Bureau has a comprehensive list of things to check for. Common errors include:
- Incorrect personal information (name, address, etc.).
- Accounts that don’t belong to you or that you didn’t open.
- Accounts that are incorrectly reported as late.
- Accounts with incorrect balances or credit limits.
- The same debt listed multiple times.
If you find an error, dispute it with the credit bureau and the creditor. For instance, if you find a mistake about your auto loan on your Experian credit report, dispute it with your auto lender and Experian. All three bureaus have online processes for disputing errors.
3. Pay attention to the ‘notes’ section of your reports.
When you’re comparing all three credit reports side-by-side, Barbara Thomas, executive vice president of Education Loan Finance, recommends honing in on the comments at the bottom of each account listed.
“Notes are populated by the credit reporting agency to further explain what might be not so clear,” Thomas says.
You may notice that the same information is characterized differently in each report.
For instance, a federal student loan that’s in default could show up as having a $0 balance, which could make it look like it’s paid off. But if it says, “recovery by the Department of Education” in the comments section that means the borrower defaulted. Another lender or bureau might describe this as “charged off.”
Thomas’s advice: Read the comments on each report and make sure they accurately describe what happened with your account. If they don’t, dispute it.
4. Keep your credit frozen.
To avoid having an identity thief open accounts in your name, keep your credit frozen. A credit freeze restricts anyone — including you — from accessing your credit report. When you want creditors to access your credit because you’re applying for a loan or credit card, you can temporarily unfreeze it.
It’s free to freeze your credit, but you have to do it separately through each of the three credit bureaus. (And when you want to temporarily lift a freeze, you also have to do it through each bureau individually.)
If you don’t want to do a freeze for whatever reason, setting up fraud alerts is another option. They don’t lock down your credit completely, but they require businesses to verify your identity before pulling your credit. They’re also free and they last for one year. You only have to set up an alert through one credit bureau — that bureau is required to tell the other two.
5. Consider a credit monitoring service.
If you’ve been the victim of a data breach, you’ve probably been offered free credit monitoring services. There’s no reason not to take advantage of it.
If you haven’t been given free access, you can choose to purchase credit monitoring. Credit monitoring services do the work of keeping tabs on your credit for you: They regularly check your reports and scores and notify you about changes or suspicious activity.
Each of the three credit bureaus offers credit monitoring for a monthly fee. (They each include monitoring of all three reports, so you only need one service.) Plenty of other companies also offer credit monitoring services, including Credit Karma, whose service is free. (But it only monitors Equifax and TransUnion).
However, you don’t need credit monitoring. You can freeze your accounts, set up fraud alerts and check your reports on your own — all for free. And if you make these things habits, maintaining and protecting your credit will start to become part of life.
Creditworthiness is an important factor in maintaining good financial health. And if you’re considering student loan refinancing, your credit score plays an important role in securing great rates. ELFI’s prequalification process is quick, 100% online and won’t affect your credit*. Speak with one of our Personal Loan Advisors today, or see how much you could save today.*