He travels to the homes of all the good children in America in one night, he is the only known mammal able to lay eggs, AND he also happens to be a financial genius. He’s the most interesting bunny in the world. Wait, let’s back up for a second… “A financial genius?” You skeptically ask. Read on and I’ll prove it’s true. These are just a few things that the Easter Bunny has taught me about my credit.
1. Responsible behavior brings me nice rewards.
Like Santa Clause and the Tooth Fairy, the Easter Bunny is incredibly busy, so he doesn’t waste his time with the “bad” children. He only wants to go to the houses of children who turn in their homework on time and take out the trash when asked.
As it turns out, lenders feel the same way. Lenders use your credit history as a tool to determine how likely it is that you will repay their loan. If you have a history of not paying your bills on time, lenders are going to see this and likely either deny you a loan or grant you a loan at a heavy price.
2. Always monior my own credit.
The Easter Bunny has a great deal of children to keep track of. So if Kathy takes Owen’s lunch money, but you get blamed for it, the Easter Bunny might not know the whole story. As a result, instead of that giant chocolate bunny you were expecting in your basket, the Easter Bunny might only leave you a couple of stale peeps.
Similarly, let’s say someone gets ahold of some of your personal information. That person could open a credit card in your name, max out the card, and never pay a dime. Guess who the creditor is going to come after for collection? The person whose name is on the card – YOU! Just like getting blamed for taking Owen’s lunch money wasn’t fair, neither is this, but such is life.
To avoid a situation like this from happening to you, it is important that you monitor your credit. As stated by the Fair and Accurate Credit Transactions Act, you are entitled to one free copy of your credit report each year from each of the three major credit bureaus (Experian, Trans Union, and Equifax). You can find your reports at www.annualcreditreport.com. If you find information on your credit report that is not accurate (i.e. accounts that you did not open yourself), you should report your findings immediately. The United States Department of Justice lists the names and contact information of agencies you should contact if you suspect you are a victim of identity theft. Proving yourself to be a victim of fraud can be a lengthy and burdensome process, and until you are able to straighten out the situation your credit will be adversely affected. However, you can minimize the burden by checking your credit report often.
3. Not all credit bureaus think alike.
Spoiler Alert: Continue reading only if you are prepared to learn the truth about the Easter Bunny.
As it turns out, the Easter Bunny sometimes gets some help filling baskets from Mom and Dad. (Did I just blow your mind?) Consequently, you might find some inconsistencies in your basket from year to year. For example, Mom might love to put a big chocolate bunny in your basket every year, but when it’s Dad’s turn to fill your basket, he might see a greater value in having lots of marshmallow peeps. (And don’t forget the basket you get from Crazy Aunt Millie each year filled with raisins and dental floss.) While you can give your input, what you receive is ultimately decided by whoever fills your basket that year.
Although the three major credit bureaus all essentially look at the same components when determining credit scores, they each use a different algorithm which can result in three different credit scores. That’s why it is important to check your credit report and score from all three credit bureaus. Although the reports are free, viewing your credit score costs a small fee. Paying for your credit score is definitely worth it, as it could end up saving you money in the long run.
4. It's never too late to improve my credit.
You wake up the morning of Easter and run downstairs to find all your treats, but what you find is sub-par. You can mope and whine about it, or you can think about why this happened and what you can do to get a better basket next year. After reflecting upon your behavior from the previous year, maybe you realize that you fought with your little brother almost every day and broke a couple of vases playing ball in the house. These are two things you decide you will work on over the next year, and if you stick to your goals, you should expect a marvelous basket next year!
Of course, your best bet is always to begin good habits young. Start yourself off with good credit, and slowly build your way up to superb credit. However, various circumstances often prevent this ideal situation from happening. If your credit isn’t where you’d like it to be, here are a few tips to help raise your credit score:
- Set up payment reminders to ensure that you pay your bills on time.
- Make a payment plan to pay off your debts.
- Keep unused credit card accounts open, but don’t open new accounts that you don’t need.
- Never carry a balance on your credit cards above 35% of your credit limit. If you are above 35%, stop using that card until you can pay down the debt.
- Ask lenders for lower interest rates.
Whenever you’re in doubt when it comes to your credit, ask yourself one question: what would the Easter Bunny want me to do?