6 Do’s And Don’ts Of Checking Your Credit Score
Knowing your credit score like the back of your hand is definitely another step down the path to adulting. Besides your cell phone number, address and PIN for your bank account, it’s a digit you don’t want to forget.
Your credit score determines how financially responsible you are. For instance, it tells banks and financial institutions how great you are at paying down debt. Plus, it can open a lot of doors as you get older and aim to rent an apartment, buy a car, apply for a loan and more. The higher your credit score, the better. And since it’s a number that fluctuates, it’s important to check it often. But be wary: There are a few rules to follow. Here are six do’s and don’ts of checking your credit score.
1. Do check it through a reputable institution.
You can check your credit score through one of the three major credit bureaus — Equifax, Experian and TransUnion — but you can also check it through your bank, credit card company or a third-party, trusted website like Credit Karma. Plus, checking your score is often free (and if it isn’t, maybe try checking it through a different source). For example, you can get a free credit report with your score and credit history every year through AnnualCreditReport.com.
Pro Tip: Mark your calendar or set a reminder in your phone to request a copy of your free credit report every December (before the end of the year.) That way, you can review the past year’s credit report and aim to make smarter decisions in the new year.
2. Don’t worry about checking it too often.
There’s a popular myth that says checking your credit score too often can lower it. That’s false. The only time checking your credit score can potentially affect the score itself is if there’s a hard inquiry on your credit report. A hard inquiry is something like applying for a car loan or mortgage. On the other hand, a soft inquiry is what happens when you check your credit score — it doesn’t affect the actual score.
3. Do look beyond the number.
There’s a lot of info that goes into making your credit score. It’s comprised of payment history, length of credit history, new credit, credit mix and amounts owed. When you check your credit score, look into each of these factors and see where you can improve. For instance, if you’ve had a poor payment history, you could work to meet those deadlines and see your score improve over time. Or if you have just one form of credit and are looking to add to the mix, think about signing up for a new credit card with great rewards and no annual fee. Your credit score number is more than just a digit, so be sure to look into all aspects of it.
4. Don’t stress too much if it falls a few points.
Your credit score can be affected by several different things. Too many hard inquires, new accounts and missed payments can cause the score to go down. For example, it may decrease if you open new accounts too close together. However, it should go back up as long those new accounts add to your credit mix and you pay the bills associated with those new accounts on time, every time. Just be patient. Two points lost now for a new line of credit could mean a higher score in the future when you need it for that mortgage.
5. Do be aware of errors.
We all make mistakes, and sometimes, your credit score isn’t perfect. Be mindful of the information that’s in your credit score and report. For instance, if you’ve had lines of credit for several years, yet the report is only accounting for the last two, you may want to look into why it’s not accurate. Your score could really increase if the correct information is being counted, so check for errors every time.
6. Don’t forget to check it!
Checking your credit score shouldn’t be on your daily to-do list, but it’s definitely something you don’t want to forget about. Knowing your score can help you make smart financial decisions. For instance, if you know for a fact that your score is excellent (800-850) then making a quick decision to sign up for a new credit card with an awesome signing bonus is easy. You won’t have to worry as much about those financial decisions, and who doesn’t want to go through life thriving like that?
Your credit score is an important part of your adult life, so don’t miss out on all the benefits that come from boosting it and managing it in the right way. A good or great credit score of 690 and higher could be just what you need to live the life you’ve always wanted.