Credit scores are based on the information in your credit report, and they can significantly affect your financial life.
Creditors, such as banks or lenders, will often look at your credit score when reviewing all types of applications. If you have a low credit score, you may be unable to get a loan, or you may be charged a higher interest rate when taking out a personal loan, a line of credit, or a business loan. This means that you’ll end up paying more money on a loan in the long run.
But your credit score can affect more than your ability to borrow money. It can affect your ability to rent an apartment, buy a car, or land a job.
So how do you make sure your credit score is in good standing? Keep reading to learn more about the benefits of checking your credit score regularly.
What is a Credit Score?
A credit score is a number between 300–850 that reflects your “creditworthiness.” The higher the score, the better you look to potential lenders. A credit score is based on your credit history, which includes your:
- Number of open accounts
- Total levels of debt
- Repayment history
- Length of credit history
What Does My Credit Score Mean?
Simply put, your credit score shows lenders how likely you are to pay back a loan correctly and on time. Therefore, it plays a vital role in a lender’s decision to offer you credit.
While every creditor defines its own ranges for credit scores, the following guideline is what most lenders use:
- Excellent: 800 to 850
- Very Good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 300 to 579
The Top 4 Reasons to Check Your Credit Score Regularly
They are several reasons why you should check your credit score regularly, including:
Know Where You Stand
Your credit score is an important part of your finances, and not checking your credit score regularly can hurt you in the long run.
Whether your credit score is good or bad, it’s better to know your credit score than to have no idea where you stand financially.
Knowing where you stand can help you:
- Respond to changes in your credit score quickly
- Take steps to improve or maintain your score
- Avoid being blindsided when submitting applications
- Prepare for any outcomes you may experience
Keep Your Credit in Good Shape or Get Your Credit in Good Shape!
It can take months or even years even to build up a good credit history. However, if you regularly check your credit score, you can take steps to increase or maintain it over time. That way, when you need a good credit score to take out a mortgage or a loan, you don’t have to panic.
Make Sure Your Information is Accurate
Your credit score is based on the information in your credit report. If you’re checking your score regularly, it allows you to ensure that all of your information is correct and up to date.
If you find that your information is incorrect, checking your score regularly allows you to report errors before it’s too late.
If you monitor your credit score, you’ll be able to examine how your financial decisions affect your score. Once you know how specific actions affect your credit score, you’ll be able to make better decisions moving forward. Please reach out if you’d like to go through your credit report with one of our advirosts on ways to increase your score. Some are simpler than you think!
How Often Should I Check My Credit Score?
How often you check your credit score is really up to you. Your credit score will change whenever the information in your credit report changes, so you should monitor your score as often as your information changes.
We recommend checking your credit score at least semiannually, but if your information changes often, you can check it every month if it benefits you.
You may notice that your score will change based on the provider you use. While this is a normal part of credit scoring, it may be easier to check your credit with the same provider.
We’re Here to Answer Your Credit Questions
Do you still have questions about how your credit score will affect your ability to take out loans? At Blue Copper Capital, our team can help you understand your credit score, no matter your financial situation.
If you have any questions about your credit score or are interested in taking out a loan, please don’t hesitate to contact us. We look forward to hearing from you!