Springtime is as good of a time to clean up your finances, as well as your home and yard.  One piece that often gets overlooked even after extensive financial and investment planning, is your credit report and score.  These are important pieces of your financial picture that can benefit from occasional monitoring.

You are entitled to a free credit report from the three reporting agencies once a year and can obtain this information at www.annualcreditreport.com.  Here you will see your payment accounts and your status with each.  Electric bills, parking tickets, credit card bills, home mortgages, and more show up on this report.   Use this to check that no one has reported a late payment or unpaid balance this is incorrect.  If something doesn’t look familiar, check it out to make sure someone hasn’t opened a credit account in your name!

Fair Isaac Corporation takes this information from the three agencies and creates your credit score or FICO score, which ranges from 300 to 850.  This number will allow credit card companies, automobile lenders, and mortgage lenders to decide how much to lend you and at what interest rate.  The score is based on a combination of your payment history, the amounts you owe, the length of your credit history, how many accounts you have recently opened, and the types of credit available to you.

The best rates on a loan or credit card are given to scores over 700, so it is important to know where you fall.  Before applying for a loan, check your credit report and score.  If something is incorrect, submit it to the agency for investigation and get the issue corrected BEFORE applying for the credit.

If you are not going to be shopping for credit anytime soon, the annual check of the report should be okay for you, however getting your actual FICO score from www.MyFico.com is important if you are looking for a new car or home.

As a general rule, paying at least your minimum payment, on time, and restricting your credit balances to less than 1/3rd of the credit available to you, will keep your score high and your interest rates low.  This means more money in your pocket and continued financial prosperity.