Your credit score tells the story of your financial life and it’s important to keep track of that score.
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“Your credit score is one of the most important metrics in your financial life because it goes a long way in determining whether you are approved for loans and lines of credit,” says Ted Rossman, senior industry analyst at Bankrate. “A credit score is a numerical measure of financial responsibility that is designed to predict how likely you are to repay a creditor on time.”
How do you request your credit report?
Rossman says you can access AnnualCreditReport.com, which is a free government resource that gives you access to your Experian, Equifax and TransUnion credit reports. Before the pandemic, everyone received one per bureau per year, he said, but that number was increased to one per week in 2020 and extended until at least the end of this year.
You can get your credit report by calling (877) 322-8228. In addition, you can also download, complete, and submit your documentation to the Annual Credit Report Request Service. Forms and address information can be found at AnnualCreditReport.com.
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What will motivate you to check your credit score?
“Because your credit score affects so many important aspects of your life, it’s wise to be proactive,” says Rossman.
“Of course, I think it’s a good idea to get checked at least once every few months,” he says.
Another situation that requires checking your credit score with all three bureaus is before you apply for a loan, he says.
“You definitely want to make sure you identify any potential errors and fix them before you apply for a loan or line of credit,” Rossman tells FOX Business. “It’s also helpful to know what your credit score is so you can be realistic about your chances of approval and likely interest rate.”
The third time you might want to check your credit is if you suspect identity theft.
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“For example, if you have been notified that your personal information has been exposed as a result of a data breach,” cautions Rossman.
What happens if you find an error on your credit report?
According to a study by the Federal Trade Commission, one in five people finds an error on their credit report.
“When you review yours, be prepared to take action to correct incorrect information,” says Jonah Kaplan, senior program manager for consumer reporting markets at the Consumer Financial Protection Bureau (CFPB).
Kaplan says the CFPB has information on credit reports and dispute letter sample on their website which can help you through the process.
In addition, he says a person should also consider blocking third parties’ access to their consumer reporting data with a security “freeze” if they have been notified that their credit information has been or has been affected by a security breach. CFPB provides information on how to do it on their website.
“Consumers reported losing more than $5.8 billion to fraud in 2021, up more than 70% from the previous year,” Kaplan told FOX Business.
Does checking your credit score affect your score?
Rod Griffin, senior director of consumer education and consumer advocacy at Experian, told FOX Business that one of the most common credit myths is that checking your credit report will hurt your credit score.
“That’s not true,” says Griffin. “Checking your own credit report does not affect your credit score. In fact, checking your credit report regularly is one of the best ways to protect your financial health.”
In fact, he says he recommends checking your credit report at least once a year and getting a copy of your credit report and credit scores three to six months before applying for a loan.
“This can help you make sure there are no signs of identity theft and that your credit scores are as good as they could be at the time of application,” Griffin continues. “If you’re working on improving your credit history and credit scores, or know you’ve been a victim of fraud, you might want to review it more often or consider signing up for a monitoring service.”
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What are the best practices to keep your credit score strong?
Since your credit score influences many aspects of your financial decisions and results, focus on your creditworthiness.
“The best thing you can do to improve your creditworthiness and protect your financial health is to consistently make your payments on time, keep your balance low, and use the tools available to you, such as Experian Boost, which allows you to get credit on time by paying your mobile phone, video streaming services and other monthly bills,” he says.
And, if you need more help, resources are available to you through reputable non-profit organizations such as the National Credit Counseling Foundation, which can be accessed at www.nfcc.org.