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Caution: Credit Hazards Ahead

Posted on: October 6, 2005

Caution: Credit Hazards Ahead

Every day, in different ways, we do things to protect ourselves without

  even giving it a second thought. Buckle our seatbelts. Wear sunscreen. Avoid the "mystery meat" at the deli. The list goes on and on.

But what are you doing to protect yourself from a credit calamity? One of the easiest ways to keep your credit
in good shape is to know how to handle the risky situations that can
lead to a credit disaster. Here are common causes of a credit meltdown
and what you can do to stay one step ahead.

Unpaid medical bills. This is how the story unfolds: you
think your insurance company is taking care of your medical bill. For
one reason or the other, it doesn’t get paid. The bill becomes overdue
and is sent to collections. Suddenly, you’re stuck with a collections
record on your credit report for 7 years.

Don’t let this happen to you. Get to know your insurance coverage
inside and out. If your insurance company doesn’t pay the bill, you’re
better off if you pay it and then negotiate the amount to get your
money back.

Divorce. If you go through a divorce, it’s important to
split up all of your joint accounts. The last thing you need is to have
your credit suffer because your former spouse is racking up credit card
bills or missing payments. Make sure all joint and co-signed accounts
from your marriage are closed or refinanced.

The best way to do this is to get your credit report
and look over your accounts carefully. Keep in mind that a court decree
alone will not stop a joint account from being recorded on each party’s
credit report.

Identity theft. You’re probably not surprised to see
identity theft on the list. Identity theft is a real threat these days,
but if you know how to prevent it, you have a better chance of safeguarding your credit.

Some prevention tips are: shred everything with your name on it
before you throw it away…only use your credit card on websites you know
are safe…don’t carry your Social Security card in your wallet…and
consider paying your bills online or with automatic payment (less mail
for thieves to get their hands on).

Another great security step is signing up for credit monitoring from TrueCredit. It’s an easy way to keep an eye on your credit.

Try
to stay on top of your credit basics now to protect your credit later.
You’ll be glad you did when you steer clear of trouble down the road.
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