It’s time for your annual credit check up! It’s not only a smart way to maintain your financial health, but to also avoid financial and identity fraud. A once a year credit checkup is like getting an annual physical…it makes great sense and makes you feel good knowing you’re healthy.

Here are a few steps to review your credit and financial health:

Step 1 – Obtain your free once a year credit reports from all three credit agencies.

Step 2 – Review your credit reports and check if there are any inaccuracies or incomplete credit history.

Step 3 – If you do find a discrepancy, report it to the agency. They are required to investigate the inaccuracy within 30 days.

Step 4 – If you do have a legitimate negative mark, contact the creditor directly to negotiate and arrange for a payment plan.

Step 5 – Your credit report’s health is reflected in your FICO score which is a measure of your capacity to repay loans. This will affect the interest rates for your loans.

Step 6 – Understand your debt ratio. Creditors prefer a debt ratio under 36%. For example, if you earn $3000 monthly they want to see debt payments less than $1080 a month.

Step 7 – Consider keeping only 2 credit cards, maintaining less than 30% of the maximum limit at any time and always pay on time.

Step 8 – Develop a budget and financial plan. Review it annually to fit your financial situation.

Step 9 – Seek help from a certified credit counselor for sound financial advice if you get in trouble.

For more financial tips check out this helpful free government site http://www.ftc.gov/

This is all part of a healthy life style. Eating right, exercising, thinking positively and maintaining your credit leads to a happier you!

Do you check your credit annually? What tips would you offer? Would love to read your thoughts in the comments below!