Many of us don’t think about or look into our online credit report unless we have applied for a new credit card or a loan. That being said, based on your credit score, you may be in for a surprise in terms of your interest rate being higher than expected for an auto loan or even your application being rejected if your credit score is less than ideal. As 90% Of Top Lenders Use FICO® Scores, it’s important to learn the factors that are positively and negatively impacting your credit score.
So, why is it a good idea to look at a credit report once a year? Let’s take a look at the top reasons to check your credit score by pulling your annual credit report, what factors may potentially be impacting your credit score, and how you can check your credit score for free.
Credit Score Monitoring: Top Reasons to Check Your Credit Score
When you check your credit score with an official credit report yearly, you can know your financial health, ensure your information is accurate, check that your lenders report your payment history, avoid surprises when you apply for a loan or credit card, and remind yourself of your goals.
Knowledge is Power: Know Your Credit Score & Financial Health
Like an annual dental appointment, checking your credit score is a great way to check your financial health. Your credit report impacts your life in many ways, including affecting your loan rates, mortgage rates and credit card application approvals. It can even impact your career in terms of job applications. In other words, it can make a big impact on your life.
When you apply for any type of loan or for credit, it’s important that you know where you stand with your credit score and your credit rating. When you pull your credit report annually to check your score and to verify the information included, you can better manage your expectations when you apply for a loan, a new mortgage, a credit card or a refinance. It’s important to note that FICO credit scores range from 300 to 850 and fall into five graduating levels: poor, fair, good, very good and excellent/exceptional.
According to myfico.com, here are the five credit ratings:
- Poor is any score less than 580
- Fair is between 580-669
- Good is between 670-739
- Very good is 740-799
- Excellent or exceptional is any score more than 800
With a higher credit score and rating, you may be approved for more types of loans, higher loan amounts and lower interest rates. This is because people with high credit scores are a lower risk to creditors. If your score is not where you’d like it to be, it’s important to accept that truth so you can improve it! If you’re happy with your credit score, create a plan to maintain it. When you check your credit report yearly, you can see your progress or what is holding you back.
Detect & Dispute Errors: Verify the Accuracy of the Information
Personal information: Your credit report will have very important personal info including your name, address, Social Security number and date of birth. Don’t skip over this information. Always double check your info.
Credit accounts: Next, you’ll see your lending accounts and the info that goes along with them.
Carefully review your credit report the following:
- types of credit (credit cards, auto loans, mortgages, student loans, etc.)
- the open date on those accounts
- credit limits or loan amounts
- balances (like your credit card balance and any lines of credit)
- payment history
Verify what is on your credit report to ensure your lenders are reporting correctly.
Note: Closed accounts will be on your report for a while but some may drop off.
Inquiries: Your credit report also will show your soft and hard inquiries. Soft pulls do not impact your credit scores but hard pulls do. Do not forget to review this information as well.
Bankruptcies and collection accounts: Finally, if you have any bankruptcies or accounts in collections this will also be listed on your report. As with the other sections, check that the items listed are correct.
Note: Your credit may be affected by others’ mistakes. While you may be hyper conscientious about paying your bills on time, others may still make errors that could impact your credit, and you may not realize it. If you have cosigned for your child’s credit card or auto loan and he or she is late on a payment, your credit may take a hit. Unless your child lets you know, or gives you access to the account, you may not find out about any late or missed payments until you check your credit report.
What to Do About Inaccuracies in Your Credit Report
If anything is truly inaccurate or missing, you can dispute your credit report online or by mail. Go to each of the credit bureau’s sites to make a dispute:
You May Stop Identity Theft and Credit Card Fraud Early On
When You Know Your Credit, You Can Keep Track Of Your Credit and if someone else has been fraudulently using your Social Security number to apply for credit, or making purchases with your payment information, you may not notice the signs unless you take a close look at your credit reports. If you think you may have been impacted by credit card fraud, click here.
Stay on Track & Remind Yourself of Your Goals
Each time you check on your finances, you inevitably remind yourself of where you’d like to be financially. Checking your credit score is a great yearly habit because it helps you take stock of how you’ve been doing and where you’d like to go.
Here’s How to Check Your Credit Score for Free
Under the Fair and Accurate Credit Transactions Act of 2003, you have the right to view your credit reports from each of the three major credit bureaus for free once every 12 months. Scheduling your credit check-ins near other significant yearly events, such as an annual physical or when you file your taxes, can help remind you when it is time for your annual credit check up.
To get your free report from each of the three credit bureaus, request them from the federally authorized website AnnualCreditReport.com. Contrary to the myth, pulling your own report will not impact your credit. Usually, pulling your credit report takes less than 10 minutes, and it can save you a lot of future headaches and hassles.
To get a credit report, you’ll need to give your name, address, Social Security number and date of birth.
Note: Many banks and credit unions provide a quarterly credit score to their customers or members.
Your credit score is just a number and does not define you but it is important. As with many important things, give your credit the attention it deserves and plan to maintain or build your credit. You can do it!
About Pacific Federal Credit Union
Pacific Federal Credit Union is a member-owned, not-for-profit, financial cooperative serving the financial needs of more than 1,721 members. Our goal is to offer our members the best rates and the finest financial services available today, along with friendly, personal service. We are able to do this because of the unique, non-profit, cooperative nature of credit unions. Credit unions are “People Helping People” organizations, and our philosophy is “Not for profit, not for charity, but for service.
Have questions about PFCU loan rates? Contact Us Today at (909) 594-1866.