In today?s economy, credit scores play a bigger role than their original mission, which was to determine your credit risk and, in turn, how much interest you would be charged when you borrow.
Now, credit scores determine if you can get a decent auto insurance rate and, in some cases, whether you get a new job, said Sean Hughes, a spokesman for the American Institute of Certified Public Accountants.
The institute, a nonprofit association, represents 340,000 certified public accountants specializing in tax, audit, accounting and consulting services including personal financial planning.
Recently, the institute identified six steps to help consumers take control of their credit scores.
“People can be proactive, ” said Lyle K. Benson, a certified accountant and president of Towson-based L.K. Benson and Co.
“More often, bad scores are driven by people not being smart in the way they handle their credit ? they miss payments and don?t talk to the lender when there is a problem,” Benson said.
But he has seen people who have filed for bankruptcy improve their credit scores in two years.
The six steps to help improve your scores are:
1. See where you rank. You need your credit report and your credit score. You can get a free credit report, up to three free reports a year, by going to www.annualcreditreport.com. To get three reports each year simply get a report from a different credit bureau every four months.
2. Realize the higher your score, the less you pay. Persons with a 720 score typically qualify for a credit-card rate of 9.6 percent compared to 18 percent for a person with a 600 score.
3. Make your self more attractive to lenders. About 25 percent of credit reports have errors serious enough to deny credit. Fix mistakes by calling the creditor and credit bureau even if it?s merely a misspelled name.
4. Protect your ID and follow-up with credit agencies if you think it has been compromised.
5. Seek help if needed. Get credit counseling if you?re in deep trouble.
6. Do additional research by visiting the institute?s Web site ? www.360financialliteracy.org ? for personal finance topics
Assistance
» A government list of approved credit counselors can be found at www.usdoj.gov/ust/
» Bankruptcy stays on your report for seven to 10 years.
» Use 30 percent or less of your available credit to look golden to creditors.
