Vigilance and common sense pay off

"Do you know what's in your credit report?" states a common TV commercial. More importantly do you know what NOT to do in regard to your credit rating? Most people pay little attention to the topic but in reality what you don't do is almost as important as what you have done. I found the following article via Digg which details 10 common mistakes people make when trying to repair their credit score. As my old personal finance professor would say, some of these items are the "kiss of death" when it comes to FICO ratings.

I was particularly surprised by the "don't declare bankruptcy" item, but not for the reason you may think. I'm not opposed to the idea of declaring, I'm just surprised that more people don't know what it will do to your credit rating. After all if you renege on your obligations what does that tell a potential creditor? For better or worse he wants to get paid.

Of course I am not defending the lending industry. Over the past few years it has engaged in some rather risky practices which will ultimately come due in the form of climbing foreclosures and repossessions. A few days I posted a report which details the rising number of foreclosures in my state, North Carolina, most of which are sub prime loans or to very risky debtors.

Probably the wisest piece of advice from this piece is the recommendation of checking your credit report. As they mention, stay away from sites like freereditreport.com. Personally I use a service provided by one of my credit cards which cost a small fee each month $9.99 but entitles me to continuous credit history monitoring and a quarterly credit report. It's useful not just for keeping an eye on your credit history, but also for fraud monitoring or tracking who is investigating your credit history. It's a small price to pay to avoid the potentially cumbersome task of straightening things our later.