Your credit score is a valuable piece of the puzzle, making it an important factor when applying for credit cards, loans and mortgages. A poor score is anything below 649, a fair score is anything between 650 and 699, a good score is between 700 and 749 and an excellent score is anything above 750. A perfect score, according to FICO, is 850. Not many people have a perfect score and this can sometimes be an unattainable number for most, but this doesn’t excuse the fact that you should do everything within your power to raise your credit and get into the good or excellent range.
Why Your Credit Score is Important
A person’s credit score is the first thing banks and lenders look at when approving clients for loans, credit cards and mortgages. In some cases, even employers run a credit check on their potential workers to assess the individual’s financial standing. A credit score is a pretty good indicator of how a person treats their bills and money. If someone has a poor score, it’s because that person was delinquent on payments, took out too many credit cards or experienced another financial blunder in their life. When you have a low score, you’re more likely to be approved for high-interest loans and credit cards, increasing the amount you owe each month on the same purchases people with better scores have made.
Companies to Use for Free Credit Checking
One of the most popular companies that allows for free credit checking is Credit Karma. Credit Karma allows you to create a free account by inputting personal information such as your name, social security number and address. With this information, the site is able to collect your credit data, giving you full access to your FICO score and report. Some other companies that offer free credit checks are Credit Sesame, FICO, Experian, TransUnion and Equifax.
How to Spot Errors on Your Report
Apart from seeing your actual credit score, running a report will give you access to the items affecting those numbers. For instance, if you filed for bankruptcy, this will show on your credit report for anywhere from seven to ten years. If you’ve closed out a credit card or have other charged-off accounts, they’ll remain on your report for seven years. These are not considered errors, but are legally able to remain there to alert potential lenders of your financial history.
However, you may check your report and notice something affecting your score that shouldn’t be there. An example of this would be an account that you knew you closed out years ago but it’s still showing as unpaid and delinquent on your credit report. Monitoring your credit score and report will alert you of these errors so that you can take the proper action to remove them.
How to Dispute Errors
You can dispute any errors found on your credit report with the three credit bureaus: Experian, TransUnion and Equifax. These agencies will take your claim, examine the error and make the appropriate decision. It helps to submit any and all necessary paperwork to backup your claims that the report truly does have an error on it so that the process goes smoothly. If the three credit agencies won’t do anything about the error, you’ll need to contact the company that put it there in the first place so they can take it off your report.
How Often to Check Your Score and Report
You are allowed to check your score through most companies once a year without it affecting your numbers. If you check your report too often, your score will go down by five points per check. When you use sites like Credit Karma or Credit Sesame, you are protected from overuse. With these companies, you can check your score as often as you like without the number going down.
Benefits of Keeping an Eye on Your Credit Report
The reason it’s beneficial for you to keep an eye on your credit report is because it allows you to take necessary action if you see errors or are dealing with a low score. You can see if items are about to drop from your report, giving you a chance to plan when you’ll apply for loans and credit cards with better rates.