Credit Reports for Seniors
The older you become, the easier it is to overlook your credit score. For many, credit scores are important during the earlier or middle parts of your life. This is normally when you take out the most loans or perform other activities that require a high credit score. Even if you do not actively need to use your credit score, it is still financially beneficial to have a high score.
Looking at your credit report is also about more than seeing your credit score. Studying your credit report is a good way of analyzing your finances, as well as making sure nobody has stolen your identity. If you are planning what you want to leave behind to your family members, it is important to understand your general financial situation and whether or not you are in debt. There are several options to monitor your credit reports, as well as additional benefits for having a high credit score.
What Determines Your Credit Score?
Your credit score is represented by a number ranging between 300 and 850. The higher your score, the better your credit is. An average credit score is between 670 to 739, while anything above 800 is considered excellent. Your credit is considered bad if it is under 650.
There are five main factors which influence your credit score. How much you currently owe in debt, general credit history, previous payment statements, your types of credit and how many credit cards you have applied for all change your credit score. These factors are all weighted differently. Your payment history and current debts have the biggest impact on your score, while the types of credit has a smaller impact.
Improving Your Credit Score
Repairing your credit score as a senior is difficult because it normally takes a great deal of time to see a noticeable change. There are a few basic steps you can take to gradually improve your credit. The first is to make sure you are paying all your bills on time. Pay attention your credit limits and avoid using the maximum amount of credit. Even if you are making all your payments on time, getting too close to the limit slows down how quickly your score improves. For the quickest results, try to use around only 30 percent of your maximum credit each billing cycle.
The most effective way to improve your credit score is through effective budgeting. With a budget, you avoid leaning on your credit cards for all your payments, and you cut out the chances of overusing your card and falling into debt. This is especially important for retired seniors. When you retire, you are living on a fixed income and cannot rely on finding new work or picking up overtime hours. You can lean on your savings, but this is a limited resource, and the more you take out of savings, the less you have to give away to your family.
Getting a Credit Report
There are many businesses that provide credit reports. By law, you are allowed a free credit report each year from the three major credit bureaus. These bureaus are TransUnion, Experian and Equifax. It is recommended to look at multiple credit reports instead of relying on one provider. Each company uses a different process to monitor your credit, so your score may differ slightly depending on the report. If you notice one report has a wildly different number than the other, it is possible there is an error with your report. It may also indicate someone has stolen your identity and is taking credit cards out in your name. Senior citizens are considered at higher risk for identify theft, so even if you are confident in your credit score, make sure to take advantage of the three free credit reports each year.
Disputing your Credit Report
If you see any errors on your credit report, you must report it right away to the credit agency. Some common examples of errors include incorrect personal information. This occurs when you share the name with someone else, and their information was incorrectly applied to your report. This may also cause additional accounts to show up on your credit report. When you are looking over your accounts, make sure all accounts are correctly marked as opened or closed. Keep an eye out for duplicate accounts as well, or inaccurate payment reports.
Reporting Identify Theft
While there are sometimes errors with your credit report, if you notice there are multiple accounts active you never opened, this is a red flag for identify theft. Normally, these accounts are maxed out. In addition to reporting the errors to the credit bureau, make sure you notify your bank and the credit card company directly. Your bank can temporarily freeze your account, preventing the credit card company from withdrawing the payment for the false accounts. Reporting identify theft can be a lengthy process, but if you do not do it, you are on the line for any charges the imposter made on your behalf.