How to Get Your Credit Score
You can get your credit score by obtaining a copy of your credit report. Visit annualcreditreport.com to get a free copy of your credit report from each of the three credit reporting agencies once per year.
How to Understand Your Credit Score
A credit score is used by creditors to determine your credit behavior including how likely you are to make payments on a loan. A higher credit score will likely make it easier to get a loan, lower your insurance payment or rent an apartment.
The three major credit reporting agencies (Transunion, Equifax and Experian) create credit reports which include a history of your credit. The information contained in your credit report that affects your score includes payment history, outstanding balances, length of credit history, recent applications for new credit and types of accounts like mortgages, installment loans or credit cards. These things directly affect your credit score.
How to Improve Your Credit Score
If you want to improve your credit score, here are some things you can do:
- Pay your payments on time. This is one of the most important things you can do to improve your credit score.
- Monitor your outstanding debt. Many scoring models compare the amount of debt you have to the credit limits. If the amount you owe is close to the credit limit, it is likely to have a negative impact on your score.
- Have a longer credit history. A long credit history will help you, but if you have a short credit history make sure to pay your payments on time and keep lower balances. This will help offset the negative impact of shorter credit history.
- Don’t apply for a lot of new credit. Too many recent inquiries may negatively affect your score. But, remember that if you request a copy of your own report or have creditors monitoring your account, these inquiries are not counted as applications for credit.
- Monitor you types and amounts of each type of credit. A mix of installment and credit cards may help your score while too many finance company accounts or credit cards might hurt your score.
- Make sure your credit report doesn’t contain errors. If so, contact the appropriate credit reporting agency to help correct the errors.