Your credit score can affect your ability to mortgage a home, get a loan, and even impact your job search. Yet, many people have never checked their credit score, and even fewer monitor their scores closely. For something that could affect nearly all aspects of life in this society, credit scores are too often ignored or forgotten. With the availability of free credit reports, there is no reason someone should not keep up with their credit score.
Your credit report, which uses FICO scoring to assess your credit risk, will list your various accounts and payment history. The FICO score uses your payment history and your debt to available credit ratio, amongst other things, to determine the risk you pose to lenders. This score is available to lenders, insurance companies, landlords, employers, and government agencies, and any other organization that you do business with that would have a reasonable business need to access your score. The lower the score, the more difficult it is to receive loans, credit, as well as increases the rate of interest you will be offered. Employers might see a pattern of non-payment as a sign of irresponsibility, and hesitate to offer a position that requires good judgment and responsibility.
Every time a credit card company, or various other lenders, look at your score, it is called a hard inquiry, and too many hard inquiries can also negatively impact your score. That is why monitoring your credit with free credit scores is an excellent way to eliminate extra inquiries. If you know your score is too low to be approved for a credit card, you could avoid applying for any until your score improves.
Using free credit scores can also be vital in keeping up with the accuracy of your score. It is not uncommon for there to be errors on your credit report, and since credit repair is a long and tedious process, it is important to report and dispute errors as soon as they are spotted. Errors that are successfully disputed will be removed from your credit report, and will not negatively impact your FICO score.
In addition to reporting errors, another mistake on your credit report may be due to identity theft. It is easy to fall prey to an identity thief, they can take out credit cards and loans in your name that you are not aware of until a lender denies you. Even if you have not been victimized, by using free credit scores, you are also taking a preventative step in protecting yourself from identity theft. Being familiar with your credit report is important to help you spot something that is out of place and not your debt.
For those with less than perfect payment histories, credit repair can be even more difficult, and it can take up to seven years for a score to recover from a bad payment history. In order to improve your score, the number one task is to make sure you make all payments on time. Another way to repair your credit is to pay off large portions of your debt, therefore decreasing your debt to credit availability ratio. The more available credit you are not using, the better your FICO score will look.
Free credit scores are available online, and they are made available by several companies. You should use a reputable site that utilizes data encryption, in order to protect yourself from identity theft. Often these sites will also offer a credit monitoring service for an additional fee, which is something to consider if you have fallen victim to identity theft in the past.