Why Do I Need My Credit Score?

Credit and Its Importance
In layman's terms, your credit defines the likeliness that you will fulfill your financial obligations. Your credit is your word. It is your bond. In the eyes of creditors, it's your reputation and a defining characteristic that allows them to put a dollar figure on the amount of money they will lend to you or your organization. Just as a poor reputation may hurt your business or personal standing in a community, poor credit will damage your reputation in the eyes of banks and lending institutions.

What Items Effect My Credit Score
Your credit score is comprised of several key elements. These elements are outlined below.

• Payment History
• Accounts for roughly 35% of your score.
• Pay your bills on time to keep your scores high.
• Credit Tip: Late payments, charge-offs, and collections will have a drastically negative effect on your scores
• Amounts Currently Owed
• Accounts for roughly 30% of your score.
• Based on the amount of debt you're currently have.
• Your debt consists of credit cards, home loans, car loans, etc.
• Credit cards generally have the most impact on your credit score.
• Credit Tip: To maximize your scores in this section, you should keep your balances in relation to your credit limits as low as possible
• Length of Credit History
• Accounts for roughly 15% of your score
• This category measures how long you've had credit. It does so by reviewing all of your accounts and looking at the opened dates.
• The longer you've had credit, the more points you'll earn in this section.
• Credit Tip: Keep old god accounts open to maximize the positive effect they have on your scores.
• Types of Credit
• Accounts for roughly 10% of your credit score
• This category is looking for a healthy mix of accounts so
• Credit Tip: Diversity is essential here.  Having a mix of different types of accounts including credit cards, auto loans, mortgage loans, etc., will insure you do well here.
• Searches for New Credit
• Accounts for roughly 10% of your score.
• When you apply for credit an inquiry will post to your credit report showing that you're seeking credit.
• Too many inquiries in a short period of time can hurt you.
• Credit Tip: Avoid excessively shopping for credit and only open a new credit account when you really need it.

Why Credit Monitoring is Important

U.S. consumers are turning to credit monitoring services, in record numbers, to help build a firewall between themselves and financial predators like identity thieves. Recently, the U.S. Federal Trade Commission called identity theft one of the biggest consumer complaints over the last decade.

How can credit monitoring help?
For starters, it keeps identity thieves at bay.  As a consumer, your worst financial nightmare is having a stranger steal and assume your financial identity. This might cause severe financial damage to your credit reports and your credit scores.

Monitoring your credit reports at the major credit reporting agencies can provide the following helpful advantages:

• Closely track any changes to your data and notify you immediately if there has been a change or security breach.
• Features that will alert law enforcement agencies and key financial institutions in the event of a breach in your identity security.
• Offer insurance against identity theft for a few dollars a month.
• Help you stay on top of your credit.
• Help identify and correct mistakes on your credit reports from creditors and lenders with incorrect financial information.

The Bottom Line
At less than a dollar a day, a good credit monitoring service can save you a truck load of money by helping you keep your financial reputation in good standing.  In addition, it’s some of the best and cheapest peace of mind money can buy.

What is identity theft?

i-den-ti-ty theft
Noun:The fraudulent acquisition and use of a person's private identifying information, usually for financial gain.

Sounds scary right? Identity theft has been labeled as one of the most pervasive and harmful crimes inflicted on the American public. It impacts more than 11 million Americans annually. Identity theft can separate a consumer from a good chunk of his or her bank account and ruin an individuals financial identity.

As a result, identity theft protection products have become a key resource for consumers to safeguard their financial and emotional well being. Below is a brief look at the impact identity theft can have:

• Time spent fixing the problem
  Time is, after all, a commodity. And when you spend your valuable time tracking down all the data and documents needed to correct an identity theft situation, the clock keeps ticking. Studies show that the average victim of identity theft spends anywhere 60-200 hours working out of the situation. That's 60-200 hours very few busy consumers have on hand these days.
• Ruined credit
  If an identity thief absconds with your identity, and you don't discover the problem right away, that thief can drain your financial resources as easy as a drought can drain a swamp. Not only could that mean the loss of much, if not all, of your financial resources, it could also mean a huge hit to your credit reports and credit scores, as the thief goes on a spending spree in your name. Make no mistake, lousy credit can mean the loss of a home loan; the loss of a job; or the cancellation of your credit cards.
• Emotional impact
  According to the Identity Theft Resource Center, one of the most serious aftershocks from an identity theft experience falls on the emotional side. Specifically, the stress associated from dealing with the crime. Studies show that the emotional grief stemming from identity theft mirrors the same grief suffered by victims of violent crime. The ITRC says that 40% of respondents in an identity theft survey reported "stressed family life" among the issues they dealt with after an identity theft situation.

Identity theft is a heinous crime. But don't think for a minute that it's all about the dollars and cents lost after the crime. The true cost of identity theft is much higher than that.