If not you, then who?Who's watching your credit report?

FRUGAL LIVING SARAH PEPPEL

Do you know who has been looking at your credit lately? Have you looked? Even more important, did you know that the three national credit bureaus are required by Federal Law to give you a free report once a year? By going online to www.annualcreditreport.com, you can request one free copy annually. Be aware that at AnnualCreditReport.com, you will pay a nominal fee for your credit score which you may not need for a basic overview of your accounts. You can also contact the agencies separately: Equifax, Experian and TransUnion. All will offer you other services which you do not need for a basic check. "But, why do I go to this trouble?" you might ask. Credit reports show who you owe, how much you owe, where you live and how timely your payments have been. By seeing for yourself what everyone else you want to buy from is seeing, you can correct any errors, cancel credit cards you don't use, and see who else has requested a credit inquiry on you. I like a bargain as much as the next person. Occasionally, I have been sucked into the spiel about opening a store credit card to save a percentage and get store coupons in the mail. When we printed our credit statement, I was shocked at seeing cards I opened and forgot about after filing the initial purchase receipts and the subsequent credit cards when they came in.

Most I never even validated. I was able to cancel several cards. Many of the offers are using the VISA/MasterCard access now. It sounds good to be able to accrue points for store credit but I find they are dangerous to have lying around where they could be stolen (or worse, used by me.) I will acquiesce to the point that picking one card from a favorite store which has good savings coupons and which you pay off monthly does help establish a good credit history and may be worth the effort. The other cards need to go. They are a nasty temptation and throw your total credit out of whack which interferes with your financing when you want to buy a large purchase like a car or a house or refinance current debt. Banks like to see regularly paid payments on a couple of debts rather than multiple open credit cards with real opportunities to spend more money and get out of control. With a lot of open credit cards with no balance, you may be considered high risk even though you see yourself as no risk at all. In case you are worried, asking for a credit report does not affect your credit score; it is called a "consumer pull" when you ask -- versus having someone else request it for you which implies you are opening a new line of credit. You have the right to know what is "out there" about you and make corrections. Once you have received your report, check for high balances and high unused limits. If you are going to keep the cards, ask lenders to reduce the limits so you don't have "empty credit." Also, you will want to notify the bureaus if a credit card is still on your account that you believed closed. Make sure to get on a regular payment schedule for cards where multiple late payments are noted. Many of the online sites for credit cards allow you to make timely payments through auto-debits from your checking or alternative payment options. It is worth the effort to get these payment regulated to increase your credit score. Lenders will look more favorably upon your future requests if they know they will get paid their money back on a regular basis. Also, make sure you are paying more than the minimum balance since the automated systems will take out the smallest amount. If you don't, the interest will accrue and you will be paying more in the end than any of the items were originally worth. Finally, avoid having more than a 50% balance on any of your credit cards. The sooner you can bring your spending under control, the more financially sound you will be in the long run.

For more questions or suggestions, e-mail Sarah at sarah@peppel.com or send me a tweet at www.twitter.com/DIYFrugal. Head over to DIYFrugal.com for more money saving resources.

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