What three digits define your finances? Your credit score. And if you want to take the road to financial independence, you better get a handle on this number now. It’s your key to getting the most value for your money.
Red Carpet Treatment or Service Exit?
A credit score close to the 850 max gets you the red carpet treatment when it comes to credit, loans, rent, or any kind of payment. You get the lowest interest rate, the easiest payment schedule, and the fewest restrictions.
One from 579 to the 300 bottom leads you to the service exit. Lenders won’t even want to talk to you let alone extend you any kind of credit.
Getting your score as high as possible should be a top financial goal.
What’s Your Number?
Credit scores vary slightly by provider. You can find yours for free from Credit Karma. You’ll need to create a usercode and password, but you won’t need a credit card. This service shows the credit scores from two of the three major credit bureaus, Equifax and TransUnion.
If you don’t want to log into an unknown website, you may also be able to get your credit score from your credit card company.
Checking Your Report
Your credit report is just as important as your score because creditors use this document to judge your financial activities and credit situation.
- It contains personal information, such as all your names, social security number, phone number, birthdate, and current and former addresses.
- It details all your credit accounts including mortgage, student loan, credit cards, and payment plans, what’s owed on each, your payment history, and any collection efforts.
- It stores public records, such as bankruptcies, foreclosures, liens, and civil judgments.
You can get your credit report from Credit Karma. However, you should check the ones offered by the two previously mentioned credit bureaus and the third, Experian. By law, you can receive one report from each for free once a year. If you check one company’s report every four months, you get a constant read of how your finances are doing.
Study the credit report for any mistakes, which can affect your credit score. Tell the credit bureau in writing what’s wrong. They must report back to you how they are investigating your dispute, which may include updating or removing the invalid info.
Raising the Score
The most effective way to raise your credit score is to pay your bills on time or before they’re due. For maximum convenience, set up automatic payments, which guarantees you’ll never be late.
Pay off your existing balances. The less debt you have, then the more likely that merchants will extend credit because you’ll have the money to pay. If you have trouble juggling payments for several creditors, consolidate them into one credit card, which may offer a period of free interest.
Limit how often you apply for credit at once. When you do, providers do a hard inquiry on you finances, which can ding your credit score. If you have to apply for additional credit, make sure you have a varied credit mix that includes installment loans, a mortgage account, and revolving debt, such as in a credit card.