Making Smart Credit Decisions
After spending a lifetime establishing good credit, it's only natural to ask what steps you should take to protect it. In a financial world where your good credit earns you access to money whenever and wherever you need it, it's savvy to know the next logical steps to keep both that privilege of access and your smarts working together to build a better financial future.
Here are a few ways to protect your credit while maintaining access to important financial tools. This will give you the financial flexibility you've earned and the protection you deserve.
How Do I Utilize My Home Equity Line of Credit?
Home equity lines of credit are low-cost borrowing vehicles that can be used to fulfill a number of personal financial needs, including home repairs and renovations, which can improve the overall value and equity of your home. Additionally, the interest paid on home equity lines of credit is often still deductible under the new tax laws that went into effect in January of 2018. If the home equity line of credit is used to acquire, improve, or construct the property (or refinance debt obtained to acquire, improve, or construct the property), the interest on the loan/line may be tax deductible. Always consult your tax advisor regarding the deductibility of interest.
The Importance of Credit Monitoring
When you've worked hard to build a solid credit score, there are plenty of scammers who want unauthorized access to your credit lines. Consider investing in a credit monitoring service. These modestly priced plans keep an eye on your credit bureau files and alert you when new accounts are opened in your name. They'll also alert you when an inquiry appears on your credit file.
Your financial institution will likely have fraud protection procedures in place for your credit and debit cards. Reach out to make sure that all possible alert features in your account are activated, your account phone numbers are up-to-date, and that you're taking advantage of the full spectrum of ways to protect your credit through your card issuers and banks.
Using these two strategies in tandem means you have two resources to help protect your credit — monitoring your credit files and monitoring your card use. These two strategies will also help prevent you from becoming a victim of identity theft, which could impact your credit for years to come.
Explore Your Financing Options
To protect your credit, it's important to explore all possible financing options when making a purchase. Do your due diligence and research before making a major purchase such as a car. Review rates offered by your bank, promotional interest rates from the dealership, and the negotiating power when you can pay cash. It's not uncommon for dealerships to run your credit multiple times even though you filled out a single credit application. This creates multiple hard inquiries on your credit reports which can severely impact your credit score.
With good credit, you'll have access to those low to zero percent interest rates for major purchases (even with things like appliances). You'll be able to keep your inquiries on your credit report to a minimum and pay the same as cash for the entire promotional term.
