Like most people, you may not always be thinking about your credit score unless you are getting ready to apply for a loan or credit card. Some people never even bother checking their credit scores. Many people think checking their credit score will affect their credit negatively and some are afraid of what they might find when they look at the score.
If you are using a credit score service for a free credit score check then your credit won’t be affected and there are a number of reasons why it makes sense to check your credit regularly.
Checking every few years is not enough and you should get in the habit of checking on a regular basis for good financial health. Your credit score is a number that represents your credit risk. This is what lenders use to know if you are a good candidate to pay your bills on time.
Credit history is a record of how you have managed current and past credit amounts and information about payments. Your score is calculated using the information found in the credit report and your credit history.
Know Where You Stand
Credit is an important part of your financial health. If you ignore your credit score, it’s almost as bad as ignoring part of your physical health. Whether it’s bad or good, you need to know your credit score if you want an idea of where your credit actually stands. If your score is good then you are able to maintain it but if your score is low, you are able to take steps to improve it.
Keep Your Credit in Good Shape
You aren’t able to just fix your credit overnight so if you are going to need to take out a loan or need credit in the future, you have to work at making sure it stays in top shape. It can take months or even years to build up a good credit history.
When you are monitoring your score with a periodic free credit score check then you can be in control of your credit and it holds you accountable.
Make Sure Information Is Accurate
Since your credit score is a reflection of the information in your credit report, checking your score will let you know what is in the report.
If your score is lower than you think it should be then it could be a sign that there are errors in your report and you will have to dispute these with credit bureaus.
You Aren’t Surprised by What Happens with Loan Applications
If you haven’t checked your score and you fill out a credit application then it’s easy to be surprised by terms that are less favorable than you want or even a denial. If you already know where your credit stands then you can prepare yourself for the outcomes.
Learn Which Actions Help and Hurt Your Credit Score
As you start to get to know your score and monitor it then you can see how different financial actions affect your credit. For example, you will be able to see how opening a new credit card or paying off an existing balance will affect your credit.
Once you know what actions affect your score then you can know what to avoid or do if you need to apply for a major loan. You may even be able to get some insight from where you check your score about how you can improve it.
Respond to Changes in a Timely Manner
When you check it regularly then you are able to respond to any changes sooner. If your score has dropped then you can use the information you find in the credit report to figure out what caused the drop and take the necessary steps to recover the points you lost.
Know When You Can Qualify for Better Credit Card Offers
Once your score starts improving then there is a better chance of you being approved for a credit card with a better interest rate, rewards, or other perks. You can use the better score as a bargaining chip that you get a lower interest rate on your current credit cards.
If you aren’t able to get a lower interest rate from your credit card issuer then you may want to consider applying for a 0% balance transfer card. This will allow you to work on paying down some debt and, with a better score, you have better chances of qualifying.
How Often Should You Check Your Score?
Your credit score can sometimes change daily depending on how often information in the credit report changes. If you are planning on applying for a mortgage or a car loan soon then checking your score more often can help you become more prepared.
If you start checking months in advance, it may give you enough time to improve your score. If you aren’t applying for any major credit anytime soon then checking your score every other month or just monthly is enough.
Your credit score is a number that reflects the information in your credit report at that specific time. In order to change your score, you need to look at the underlying information and work on good payment and spending habits. Even a free credit score check can give you information about the details that influence your score.
If you are monitoring your score more frequently then you will notice it moves up and down. Unless your score has dropped considerably and has stayed there, you shouldn’t worry too much about changes to the score.
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