Why You Should Check Your Credit Score

Introduction

There are many reasons to check your credit score, but mostly that should revolve around the report itself. The score is only a number, and all it does is tell you your risk level as computer by the major credit reporting agencies. It doesn’t tell you why or who has contributed what to your report.

Your Credit Score and Your Credit Report

So in addition to your score—and more importantly—you need the report. Why? Because next time you get your electricity connected, buy a car, apply for a credit card, order service from a cell phone provider, or even apply for a job, your credit report will likely be scrutinized. Even on existing credit, the company may look at your recent history to decide on increasing your credit limits.

Errors in Your Credit Report & Their Impact on Your Credit Score

Unfortunately, your report can contain errors, and this will bring your score down. If you check your credit score regularly, you will know what sort of activity is contributing to it, as well as whether it’s accurate or not. While only 38% of American’s know their credit score, it’s estimated that over 70% of reports contain some kind of error.

Obtaining Your Credit Report

The three major credit reporting agencies—TransUnion, Equifax, and Experian—are required to send you, at your request, one free credit report per year. From this report, you should make note of all errors and discrepancies, and take action to correct it all. For instance, you may have a payment on a credit card that never got posted. Write letters to the credit card company and all credit reporting agencies who carry this information and get it fixed (complete with a letter from the credit card company saying it was their error and is fixed). You may have gotten confused with a relative with the same name who has a lousy credit score—again, write letters and get it fixed. Even one point on your credit score can help or hurt you.

Check Your Credit Report Regularly

So it pays to know your score and to inspect your report periodically. You are entitled by law to one free report every 12 months from each of the major credit reporting bureaus. You should take them up on this offer, but remember that doesn’t include your score—generally you have to pay extra for that. In the end your score is less important anyway. It’s what contributes to it that counts.