How to improve your credit score and avoid identity theft

Your credit score is a number that reflects your creditworthiness, or how likely you are to repay your debts on time. A good credit score ca...

Your credit score is a number that reflects your creditworthiness, or how likely you are to repay your debts on time. A good credit score can help you qualify for better interest rates, loans, credit cards, and other financial products. A bad credit score can make it harder and more expensive to borrow money, rent an apartment, or even get a job.

Identity theft is a crime that occurs when someone uses your personal information, such as your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes. Identity theft can damage your credit score and reputation, and cause you a lot of stress and hassle.

Fortunately, there are ways to improve your credit score and avoid identity theft, or recover from it if it happens to you. Here are some tips and steps to follow:

How to Improve Your Credit Score

There are many factors that affect your credit score, but the most important ones are:

• Your payment history: This shows whether you pay your bills on time or not. Late or missed payments can lower your score significantly.
• Your credit utilization: This is the percentage of your available credit that you use. A high utilization rate can indicate that you are overextended and may have trouble paying back your debts.
• Your credit history: This shows how long you have been using credit and how well you manage it. A longer and more diverse history can boost your score.
• Your credit mix: This shows the types of credit you have, such as credit cards, loans, mortgages, etc. A balanced mix of different types of credit can show that you can handle various forms of debt.
• Your new credit: This shows how often you apply for new credit or open new accounts. Too many inquiries or new accounts in a short period of time can lower your score.

To improve your credit score, you should:

• Pay your bills on time every month. This is the most important factor in your score. You can set up automatic payments or reminders to help you stay on track.
• Keep your credit utilization low. Ideally, you should use no more than 30% of your available credit at any given time. You can lower your utilization by paying off your balances in full every month, requesting a higher credit limit, or using fewer cards.
• Check your credit reports regularly. You can get a free copy of your credit report from each of the three major credit bureaus — Experian, TransUnion, and Equifax — once a year from AnnualCreditReport.com. You should review your reports for any errors or inaccuracies and dispute them if you find any.
• Build a positive credit history. If you are new to credit or have a low score, you can establish or rebuild your credit by opening accounts that report to the credit bureaus, such as secured cards or credit-builder loans. You can also ask someone with good credit to add you as an authorized user on their card, which will allow you to benefit from their payment history and credit limit.
• Be selective about applying for new credit. You should only apply for new credit when you need it and when you are confident that you will be approved. Every time you apply for credit, a hard inquiry is recorded on your report, which can lower your score by a few points. Hard inquiries stay on your report for two years, but only affect your score for one year.

How to Avoid Identity Theft

There are many ways that identity thieves can obtain your personal information, such as phishing emails, data breaches, malware, skimming devices, dumpster diving, etc. To protect yourself from identity theft, you should:

• Use strong passwords and change them regularly. You should create unique and complex passwords for each of your online accounts and avoid using common or easy-to-guess words or phrases. You should also update your passwords every few months and never share them with anyone. You can use a secure password manager to keep track of your passwords and generate random ones for you.
• Use two-factor authentication (2FA) whenever possible. 2FA is a security feature that requires you to verify your identity with an additional factor besides your password, such as a code sent to your phone or email, or a biometric scan of your fingerprint or face. 2FA can prevent unauthorized access to your accounts even if someone has your password. You should use an authenticator app (not SMS) for 2FA, as SMS codes can be intercepted by hackers.
• Monitor your financial accounts and statements regularly. You should check your bank and credit card accounts online at least once a week and review your statements every month for any unauthorized charges or withdrawals.