Take Inventory To Improve Credit Heath

Take inventory to improve credit health

Here's a suggestion for something to do in March, as we wait out the end of another long Canadian winter: take a credit inventory. Just as you would with any other part of your personal finances, you want to examine how you've been spending your money and look for ways to do it more effectively.
Start by taking a good look at the numbers: your credit score, where you've been, where you want to go. Has your credit score gone up or down over the past year? Are you planning a major purchase in 2008, like a car or a house, where you'll need to convince lenders your credit is absolutely the best it can be? Does your creditworthiness allow you to negotiate for the best rates and terms available? The year may no longer be new, but you can still set some goals for yourself financially.
Take a look at your credit profile to determine spending patterns and see where you can improve or save yourself money. Interest charges on unpaid balances are often an area where people can improve. For example, if you have a $5000 balance on a card with an interest rate of 17%, you're going to pay $850 in interest charges.
If you can't pay off your balance immediately, negotiate with the credit card company to lower your rate. Often they will lower it rather than lose a customer (if your credit is good). If the credit card company refuses to lower your interest rate, consider transferring the balance to a card with a lower or zero interest rate on balance transfers. You might've been receiving such offers in the mail all along. (Just be careful not to add to that balance with new charges as you pay it off.)
A useful option for paying down credit card balances is to set up an automatic payment plan with the credit card company. With automated payments, you don't have to remember to pay every month (and you'll never have to worry about late fees or penalties).
If you're worried about purchasing too much on credit, or just want to see where your money's been going, your credit card statements, if you've saved them, can provide an invaluable snapshot of how you've been spending your money over the past months. (And if you haven't saved paper copies, most credit card companies will allow you to access online statements.) Take a look at all your monthly statements over the year to determine where your money really goes. If you're planning to make a budget, credit card statements can show you expenses you might need to budget for that you weren't considering -- or show you areas where you can cut back.
Finally, you probably already know that it's critical to check your credit regularly to make sure there are no inaccuracies or instances of identity theft or fraud. Now is a good time, if you haven't been doing this regularly, to start. And if you find inaccuracies, you'll need to dispute them.