Check your credit and check it often!

I recently had an experience with American Express that stresses the important of checking your credit report 1 time per year (free once per year for all 3 bureaus at annualcreditreport.com) and make sure everything is in order. I will use my true life story to make the point:

American Express recently started slashing people's credit lines in order to reduce risk. This makes sense as defaults are up, the economy is down, and unemployment is at near depression levels. Personally, my credit lines were slashed too low and I need a higher limit for work related business expenses. What a pain!

To make a long story short American Express claimed they saw a serious delinquency on my credit report. Turns out that a dispute with another creditor of mine that they cashed the check for my payment but did not post it drug on for nearly 4 months. On paper, my account was VERY past due. AMEX saw this and dropped my limits.

After getting transferred around and many mixed answers I was told to fax them a copy of my Trans Union credit report. I had pulled my report and saved it back in April of this year and they said that would be fine. I immediately faxed it over.

Today when I logged into my accounts and I notice that my spending limits were back up to reasonable levels. I am happy to have this sorted out and back to normal. It took 2 weeks of fighting with them over the phone to get to this point.

The moral of the story: Be SURE that everything on your credit report is 100% accurate. If I had not caught this issue I could have been denied credit for other things such as an auto loan, another credit card, or even a mortgage. It is free and takes only minutes so their is no reason not to do it.

A lot of people who have not checked their credit in a while see some unpaid utility bill or other small item that puts a big dent in their credit score. This can cost you potentially thousands in interest rates and other fees due to your "higher risk" as a borrower. A little time now can save a lot of headache, money, and paperwork later.

Checking your credit report annually also helps prevent and stop identity theft. If someone opens accounts under your name you will no as they will not look familiar to you on your report. The sooner you catch it the sooner you can start getting it corrected so you can get you financial life back to normal. This is another reason to SHRED or BURN EVERYTHING.

Be sure to give your credit an annual checkup. I do mine in the spring as part of my financial "spring cleaning" where I check my credit, re-evaluate my portfolio asset allocation, and adjust any long term goals as needed. Taking this simple step will make your financial life a lot easier in the long run!