It’s easy to forget about your credit score with everything else going on in your life. Unfortunately, you’re reminded of your score as soon as you go to apply for a loan or mortgage. If you have a poor score, you’re likely to be denied or approved with a ridiculously high interest rate. Taking steps to check your report and raise those numbers will help your financial life tremendously.
Your Credit Score Matters!
Those who have excellent scores are likely to receive the loans, mortgages and credit cards that suit their needs. Banks and lenders practically flock to these people because they are seen as being financially responsible with their income. Poor and fair scores are a bank’s worst nightmare because it shows to them that the person has a history of payment delinquency. Unfortunately, establishing no credit at all is just as bad as having a poor score. You need to build solid credit to have access to low interest rates and mortgage qualification.
How to Check Your Score and What to Look For
The three main credit reporting bureaus, Experian, Equifax and TransUnion, offer free annual reports that you can take advantage of. These reports give you a comprehensive view into your score and what’s affecting those numbers. You can also use companies like Credit Sesame and Credit Karma for reputable reporting. Both of these companies are free to use and have an over-usage protection policy so that your score is not affected if you check it more than once a year. You should never pay to view your credit report, since there are dozens of reliable companies offering free services.
When you check your report, you’ll first get a view of your score. Any score below 649 is considered either poor or downright bad. Scores ranging from 650 to 699 are fair or average. A score of 700 to 749 is considered by FICO to be good and anything above 750 is excellent. The perfect FICO score is 850, but there are not many people throughout the country who can say they have a perfect score. After you check your numbers, you’ll want to look at the report.
Your report will show why your score is what it is. If you filed for bankruptcy, that will be on your report for seven to ten years. If you’ve been delinquent on payments or have closed out credit accounts, you’ll notice these items on the report, too. There may come a time when you check your report and notice an error that shouldn’t be there. An example of an error would be if you closed out a cellphone account that you had years ago and it’s now showing as still open and delinquent. This is obviously a mistake and should be removed as soon as feasibly possible.
Disputing These Errors
Once you find an error on your report, you can dispute it with any of the three credit bureaus. They will remove the mistake only if they feel it truly is an error and shouldn’t be there. This prevents people from going to the bureau and asking for valid items to be removed from their reports. It might take months to get the mistake off of your report, but what it can do for your score is substantial. Some people have raised their score by hundreds just by having an error removed. If the credit bureaus are doing nothing to help, you’ll need to go to the company that filed the claim and ask them to remove it.
While it could take years to go from a poor score to an excellent one, it’s still an objective you should work to achieve. To repair your credit, you’ll need to be on time with all of your credit card payments, pay off loans before their due date and avoid taking on too much debt. Put yourself and your family on a budget and stick with it to prevent overspending that leads to insurmountable money problems. When you manage your money responsibly, your credit score will go up as a result. Both debt settlement and consolidation are ideal for people who have taken on too many debts and need professional help to see the light at the end of the tunnel.