Checking your credit score is never a bad thing. You’re entitled to one free copy of your credit report every six months. And there are many websites that allow you to regularly monitor your credit score as well. Keeping track of your credit score can help you know what to expect when applying for credit and loans.
You’ve likely heard of a credit score and credit report before. But what are these things and what do they really mean? Well, a credit score is a three-digit number that tells lenders how trustworthy you are when it comes to credit and loans. It represents your “creditworthiness.” This is a term that’s used to describe how reliable of a borrower you are. Do you make payments on time? Do you pay back the entire amount by or before the due date? These things directly contribute to your creditworthiness.
There are three main companies that compile all of your financial information and then give you a score. They are Equifax, Experian, and TransUnion and they’re referred to as “credit bureaus.” These bureaus track your payment history, your credit usage, your overall debt, and more. Then they give you a score based on all of this information.
The report that these companies compile in order to give you a credit score is called your “credit report.” This is where all of your past borrowing and financial information lives. It’s important to check your credit report at least once a year to make sure that all of the information is accurate. Unfortunately, there are times when information on a credit report is not accurate and it can negatively affect your credit score. If you do find any inaccuracies in your report, it’s important to report that information to the credit bureau to have it removed.
The best advice we can give you to improve your credit score is to lower your credit card usage, pay off your current debts, avoid taking out too many loans or credit cards, and always make your payments on time.