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When you go to apply for a loan or mortgage, the bank will look at your credit score before anything else. If your score is in the poor or average range, it’s likely that you’ll be denied the loan you’re in need of. You can’t repair your credit score if you don’t know what it is, so it’s crucial that you check it at least once a year to keep track of those numbers.

Why Your Credit Score Matters

People with poor credit scores can either be denied borrowed money entirely or receive loans and mortgages with high interest rates. Banks look at bad credit as an indicator of how a person uses their money. Poor scores are often a result of bad financial decisions, late payments and routine delinquencies. Lenders protect themselves by denying these individuals loans, mortgages and credit cards. Banks that do work with bad-credit clients attach ridiculously high interest rates to anything they give out. This is why it is critical that you check your score and do everything in your power to raise it; it can actually save you money long-term.

How to Check Your Credit Score for Free

Generally speaking, you should never have to pay for your credit report. There are hundreds of companies that run free reports for their clients whenever they request a copy. The three main credit reporting bureaus (Experian, Equifax and TransUnion) offer free annual reports to anyone who requests one. You can also use commercial companies like Credit Karma or Credit Sesame for your free check. The beauty about Credit Karma, in particular, is that they allow you to check your score as often as you like without it affecting your numbers. Many commercial credit reporting companies offer over-usage protection, which is yet another quality to look for when you’re choosing a site.

What to Look for in the Report

Once you request a copy of your credit report, you might be confused because of all the numbers and items attached. First, you’ll be met with your actual credit score. Scores below 649 are in the poor or bad range. Anything between 650 and 699 is considered average. FICO considers scores in the 700 to 749 range as good and anything over 750 is excellent. The perfect credit score is 850, but it’s important for you to not focus on reaching perfection, but attaining a score that’s good or excellent. When your score lies between 700 and 800, banks and lenders look at you as a viable candidate for their loans and credit cards. You’ll receive low interest rates on all borrowed money and have better contract terms.

Apart from your score, you will also get a full report of your credit history. This history report includes the items that have been used to determine your score. For instance, your score might be low because you filed for bankruptcy years ago and it’s still showing on the report. You might have a low score because you’ve had multiple late payments and have closed credit accounts in the past. However, there may come a time when you check your report and notice something that shouldn’t be there. An example of this would be a delinquency on an account that you closed out years ago. These errors can be disputed and removed if found to be invalid.

Disputing Errors and Mistakes

You can dispute any error on your credit report by contacting the three credit bureaus. You will need to present them with valid information that backs up your claims that the item truly is an error. Once they have determined that it should not be on your report, they will remove it and your credit score will go up as a result. While it could take months to dispute these claims, you could raise your score by hundreds and go from having poor credit to good credit.

It could take years to naturally repair your credit score and get it into a better range. This doesn’t mean that you shouldn’t try to improve those numbers, as they’ll just stay the same or get worse if you do nothing about them. Make sure to pay bills on time and avoid taking out too many credit cards that only lead to more debt accumulation.