Your credit is a vital part of your overall financial health. Keeping your credit in good standing can help facilitate the application process for loans or lines of credit, so it makes sense to take measures to protect your credit from harm. With that in mind, here are a few tips to help protect your credit health now and in the future.
What is credit?
Let's start with a definition. Credit refers to an individual's ability to borrow money from loan providers, as in applying for a new credit card. The stronger your credit history, the more likely you are to be approved for a new line of credit.
Financial institutions assess your credit when determining how much money to lend to you, and what terms and conditions to put on that financing. They may access data about your credit using information such as the balance of your bills and debts, what you owe on your existing lines of credit or major financial events like bankruptcies to compile a credit report.
It can take time to establish credit, and if your credit falls into poor standing, it may become more challenging to borrow money from lenders. That's why it's so important to take steps to protect your credit.
5 ways to help protect your credit
With a bit of planning and vigilance, anyone can take measures towards protecting their credit. Here are some ways to help you stay in good standing:
Review credit reports
Everyone is entitled to a free credit report from each of the credit bureaus every year. Taking advantage of these reports may be one of the best ways to protect your credit.
When you review your credit report, you'll receive a credit score between 300 and 850. The higher your credit score, the better your credit standing, meaning you'll likely have better access to new lines of credit. Each of the credit bureaus uses slightly different sets of data to determine your credit score, so you may want to get all three reports to compare them.
These reports will help you see where your credit is today, and they may also provide you with guidance on how to improve your credit score going forward. Monitoring your credit report regularly may make it easier to catch issues that may affect your overall score. You may be able to deal with any problems faster than you would if you weren't keeping an eye on your report.
Use multi-factor authorization
One way to help stay a little safer is to use multi-factor authorization on any websites or applications you use.
Multi-factor authorization is a security measure requiring users to present multiple pieces of evidence to an authentication mechanism in order to access their account. For example, you may be asked to verify your sign-in by entering a code sent to you via a text message.
Keep your physical credit card safe and up to date
If you've ever lost your physical credit or bank cards, you know it can be a frustrating experience. It can take time to replace the cards you lost, and if your credit card falls into the wrong hands, it could negatively impact your credit.
In addition to keeping your credit cards safe and away from prying eyes, it's helpful to ensure your cards are up to date. Your card issuer may send you a replacement card when your current card is getting ready to expire. It's best practice to activate the new card right away and safely destroy and dispose of the old one. This can help ensure you're using the most up-to-date and secure version of your card.
Set strong passwords
Passwords are often your first line of defense when it comes to keeping your private information secure, so it may help to use a variety of passwords and increase their strength by combining letters, numbers and symbols. It may be wise to avoid using passwords that can easily be guessed, like your pet's name or your anniversary.
There are a number of secure password management platforms out there that can help make this process a little simpler. These tools can help you set and save secure passwords on any device you use, and they may also alert you when a password has been compromised or needs to be updated.
Enroll in a credit monitoring service
Accessing your credit reports every year is an important way to protect your credit. But what if your credit is negatively affected in the time between those reports?
This is where a credit monitoring service like Chase's Credit Journey comes into play. With these services, you can check in on your credit standing at any time. You'll also receive notifications when something happens that may affect your credit score.
In some cases, acting quickly to address an issue with your credit can make a big difference on the impact it has. This makes credit monitoring services a helpful tool to protect your credit year-round.
Taking measures to protect your credit means protecting your financial wellbeing. By keeping a watchful eye on your credit reports and taking measures to keep your personal information and credit cards safe, you can take major strides toward keeping your credit in good standing.