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How Seniors Can Improve Their Credit Rating

Kimberly Palmer

When it comes to finances, sometimes parents and grandparents need a little extra help. That's because they are often targeted by scam artists and can face more credit report problems than young people. In fact, the Society of Certified Senior Advisors has found that seniors tend to build up more debt and have more errors on their credit reports, which can have a negative impact on their credit scores.

One problem might be a technological barrier. Younger people are more likely to check their credit reports, while just one in four seniors did so, according to a 2012 study in the society's publication, CSA Journal. The organization urges seniors to regularly check their credit reports, which anyone can do for free once a year at AnnualCreditReport.com. Seniors also tend to earn lower incomes and have lower risk tolerance, which makes it even more important that they protect themselves financially.

To prevent fraudsters from targeting them and hurting their credit history, seniors sometimes need help navigating the Internet. One U.S. News reader wrote in an email that his father, who he asked not to be identified, connects with strangers online, and those strangers then contact him by phone and mail. While he reminds his father not to reach out to people he doesn't know, his father does so anyway, and would be furious if a concerned family member tried to take away his computer.

[Read: How to Protect Your Elderly Parents From Being Scammed.]

To help protect seniors and educate them about appropriate online behavior, the North American Securities Administrators Association has a Senior Investor Resource Center on nasaa.org, which urges seniors to avoid strangers offering unusual or too-good-to-be-true deals. It also recommends taking special care during difficult times, such as after a hospitalization or death of a spouse, when a con artist might be looking to take advantage of the situation and prey on fears.

In addition, financial experts recommend helping the seniors in your life take these steps:

-- Get an annual checkup. Obtain a copy of your credit report -- it's free once a year -- at AnnualCreditReport.com. You have to pay to obtain your actual score, but getting the report alone will allow you to check for mistakes. And don't fall victim to a site that requires payment for a credit report and then automatically enrolls you in a credit-monitoring service.

[Read: Where to Look for Free Information About Your Credit.]

-- Fix errors. Credit bureaus are required to correct errors by law. If you see a mistake, contact them, either through their website, over the phone or by letter, to explain what's wrong. The Federal Trade Commission recommends including copies of any documents that support your position as well as the copy of the report itself, with the errors circled. The FTC offers a sample dispute letter on its website.

-- Maintain a paper trail. Keep copies of everything you send to the bureaus, and request a return receipt at the post office so you know they received your mail.

-- Beware of credit improvement scams. Dozens of companies offer to help you improve your credit score for a fee, but the easiest (and cheapest) method involves a pretty basic technique: Pay all your bills on time, stay well under your credit limits and keep accounts in good standing over many years.

[See: 6 Steps to the Retirement Lifestyle You Want .]

Meanwhile, to boost an ailing credit rating, try these strategies:

-- Pay your bills each month. The surest way to boost a credit score is pretty simple; you just have to make regular monthly payments. Avoiding credit altogether can do more harm than good, since lenders want to see that consumers have experience managing credit accounts.

-- Don't co-sign for a friend or relative, and make sure your parent and grandparent avoids doing so. Even spouses can harm each other's credit by co-signing for a credit card. Once your name is on an account, you're responsible for it, even if you break up. So limit your exposure to that risk by avoiding co-signing accounts whenever possible.

Despite rumors to the contrary, having a good job does nothing to boost a credit score. In fact, income has no effect whatsoever on a score. The only thing that matters is your credit history, which shows whether you pay your bills on time.

If you do run into financial trouble and have to resort to filing for bankruptcy, your credit score can begin to rebound after one year of making on-time, regular payments. Then, after seven to 10 years, it's taken off your report, and you can fully recover.

The bottom line: Try to lend a hand as older relatives take these steps to protect themselves and their finances. Sometimes, they need a little extra help.

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