Mention spring cleaning to most people and they immediately think of a vacuum cleaner, dust cloth and furniture polish and, for the really ambitious, a pail, spray bottle and squeegee for window washing. Cleaning up finances can be even more rewarding and is guaranteed to last longer than dusting. The real payoff is that future financial hassles can be avoided by just a few simple steps, and if you are the typical busy worker, homemaker or retiree, time is a valuable commodity.
• Clean up your credit report: Review your credit report, which is free at www.annualcreditreport.com. Three major credit bureaus – Experian, Equifax and TransUnion – keep track of your credit card accounts, mortgages, loans and other pertinent facts about your finances. Although each may keep substantially the same information on file, the way credit lines and derogatory items are presented may differ. A careful review of your reports is strongly advised on an annual basis. Access all three reports at once or one at a time over the course of the year to see your progress in ensuring good credit. The most common score is the Fair Isaac score, known as FICO. Information about your credit and loan history, including amounts and payment history is used extensively by potential lenders to evaluate your credit worthiness, so, if you find false negative items or mistakes, you should file a dispute with the credit bureaus to have them corrected or removed.
• Clean up bad credit: Fixing bad credit is all about starting to pay bills on time, budgeting and using credit wisely. At the first sign of a late or missed payment, inform creditors of your present situation and how you plan to resolve your financial problems. If you have a good payment history, you may be able to negotiate your next payment. Pay down the credit cards and loans with the highest interest rates first. If you can’t pay off your monthly credit-card balance in full, at least pay more than the minimum while you work off the debt.
• Eliminate old paperwork: Shred ATM receipts and bank deposits after they appear on bank statements. Shred pay stubs after matching them with your year-end statement. Properly disposing of these can help prevent identity theft. Shred your utility statements after you’ve paid them. If your credit-card statements are accurate and you have paid them, you can shred them, too. However, you may want to retain statements showing big-ticket purchases. They could be useful for insurance or warranty proof purposes. To prevent identity theft, use a paper shredder, available at your local office supply store and check with your local bank to see whether they offer free shredding throughout the year.
• Go paperless: Cut down on paperwork by opting for electronic bills to be sent to your password-protected email. Decreasing the number of paper bills sent to your home can help fight identity theft, which is the nation’s fastest-growing crime. About 19 people become new victims every minute. Keep your passwords safe and your online bill-payment method secure. Call Equifax at 1-800-685-1111, Experian at 1-800-397-3742, TransUnion at 1-800-888-4213 and the Federal Trade Commission at 1-877-438-4338, if you think your identity has been stolen.
• Organize records in a simple file: Keeping records properly filed can save you time and money. Harris Interactive, a market research firm found that 23 percent of adults say they pay bills late – and thus incur fees – because they lose the bills. In addition to substantial late fees, misplacing bills could potentially lower your credit score.
• Decrease the plastic in your wallet: Limit the number of credit cards you own and carry. Use just one card if you can and pay the balance on time. Carefully read your monthly statements to make sure the charges are accurate. Use the phone number listed by the item charged to dispute the charge. If the entity named refuses to remove the charge, contact the credit-card company to take action. Don’t hesitate to contact your creditors to ask for lower rates on cards on which you have made regular payments.
• Virginia Peschke is executive director of Consumer Credit Counseling Service of McHenry County.