If you are like most people, you typically don’t think about your credit score until you are getting ready to apply for credit. But more and more places are using your credit background to determine if you are an ideal and responsible candidate. Employers, landlords, and even insurance companies are now using your credit score to qualify you. On many levels, you are defined by your credit score – like it or not!
It’s important to first understand why your credit score and report are so important. A credit report is a record of how you manage your money. These reports contain a history of balances, payments, accounts, inquiries and other pieces of personal information that lenders use to evaluate whether to extend you credit. If you have a credit card or a loan, you have a credit report. Credit scores are calculated from the data contained in your credit report. Generally, scores range between 300 and 850. Typically, the higher the number, the better the score.
The 3 major credit reporting agencies – Experian, TransUnion and Equifax provide similar information, but there are often variations among them. You can get credit reports from each agency once a year at no charge, at Annual Credit Report.com, or using websites such as CreditKarma.com.
The days of checking your credit score annually are long gone. The new norm is to check your score monthly, especially if you are prepping to apply for new credit, refinance, or even look for a new job. It’s important to remember that you can check your credit score as much as you’d like without impacting your score. If you’re working to improve your credit score, you may want to check more often to make sure there is an upward trend. You’ll be able to verify that the changes you’ve made have been applied – this could include disputes, paying down balances, closing accounts, etc.
If you’ve been the victim of identity theft, you’ll also want to check in more frequently to make sure the damage has been corrected and that no new accounts have been opened. You’ll be able to see who has been pulling credit report inquiries as well and determine if they are fraudulent. A customer recently found out only from monitoring their credit report that several store credit cards and a cellphone plan had recently been opened in her name – and she had no idea! She was able to close the accounts, have them removed from her report, and have additional security measures put in place by the companies who opened the accounts.
It’s also important to make sure that the bureaus and creditors are reporting your information correctly. Creditors may not report to all 3 bureaus, and the 3 bureaus don’t share information, so if you notice when reviewing your credit report that one or even two of the credit bureaus are missing some information that was stated in the report from another bureau, report it immediately in order for your credit reports to be updated and to include that data.
At Litchfield Bancorp, you’re more than just a number and credit score. We truly believe that every customer counts and we look forward to helping you with your financial needs – whether it’s applying for new loans or mortgages, helping you beef up your savings or retirement accounts, or simply opening up a new checking account. Give us a call or stop into one of our branches today!
Vice President, Lakeville Manager