Disclosure: This post contains affiliate links, which means I earn a commission at no expense to you. Affiliate links are marked with the asterisks (*)
Do you monitor your credit score on a regular basis? If you don’t, you should. Here’s why it’s so important.
You may hear a lot about credit scores and trying to boost them. Your friends are talking about it. Maybe your financial adviser has mentioned it. The problem is you’re just not interested in monitoring this number.
Many people don’t think of their credit score until it comes to getting a credit card or loan. It could be when they’re turned down for a loan because of their score that they look into it.
You need to monitor your credit score. I check my score on a weekly basis, although I tend to only really see a change on a monthly basis based on when companies are reporting things to the reporting bureaus. I do it for more reasons than just to keep an eye on my score.
Making sure you’re in a good place for a loan
Of course, you need to monitor your credit score if you are looking for a loan or credit card. Lenders love people with a high score. It means that you are a low risk for defaulting on the loan, so you’re likely to be approved.
If you have a slightly lower score than perfect, you can still get approved. You just probably won’t get the best interest rates available. Lenders reward good borrowers with good interest rates.
Before you apply for a loan, you’ll want to take a look at your position with your credit score. Do you think you can wait for the loan and spend a couple of months pulling your credit score up, or are you happy with where it is right now?
Monitor your credit score to make sure everything is reported
It’s important to check on the lenders that you’re currently with are doing the right thing. You should see your credit card statements and some bills reported on a monthly basis. You won’t see all your utility bills reported on these reports, but the big things like your credit cards and cell phone statements should be there.
You may find that your rent is reported in some cases. This will depend on your landlord and any reporting bureaus in your area.
If you have a car loan, mortgage, or other long-term debt, that should appear on your credit report as well. It’s important to make sure your lenders report to the bureaus every month. This shows to lenders that you are paying off your debts as according to the plan.
MORE: How to pay off your credit cards to boost your credit score
Make sure there are no surprise loans
When you monitor your credit score, you’re also monitoring your report. You take a look at all the money that you owe and the agreements that you’ve entered into. Is there something on the list that doesn’t look right?
The credit report is how some people find out that they have something against them. The collection agencies may not have got in touch yet, or there may be something fraudulent going on. The sooner you know about it, the faster you can tackle the problem.
It’s scary when there’s fraud on your account. However, the credit bureaus have a way to report this and then you can gather the paperwork needed to prove that this isn’t you. You’ll also need the companies to share the documents they gathered.
I’ve been in this situation before. Someone opened a cell phone account in my name after I’d moved house. The cell phone company hadn’t done their due diligence to make sure the details given for payment were right so it was quickly taken care of, but it was stressful at first.
Monitor your credit score for the other information
Your credit report has a lot of other information on it other than your credit score. You’ll see your full name, address, and date of birth. It’s important to make sure all of this information is right.
If something is wrong, you can end up with debts applied to you incorrectly. You can end up with the wrong score because you haven’t been at the same address for a couple of years due to the error. The date of birth being wrong can also throw a lot off.
The last thing you want is for someone to put a loan in your name. You don’t want the hassle of dealing with it, so make sure your current information is right.
See what you can do to improve your score
Most credit bureaus and apps want you to improve your credit score. They will go through everything that you can do to fix your score. This could be to add a long-term, consistent loan to show your ability to stick to an agreement for three to five years. It could be to diversify your debt through adding a credit card.
There are a lot of ways to improve your credit score. The bureaus will take you through the things that affect your credit score in a high or low way.
The highest thing that has an affect on your score is missed payments. You’ll be able to track any missed payments that you have, and make sure those are corrected if they are incorrect. Another factor is your utilization, so you can look into this and make sure you stay below the 30% for good utilization.
MORE: 5 budgeting myths holding you back from financial freedom
Get in touch to see how I can help you with your finances, including boosting your credit score.
