New Year, Better Credit Score

The new year is an ideal time to review your financial goals for the future; it’s fresh, new, and a time of intention. Credit and finances go hand in hand, so it’s also the perfect time to spot-check your credit and identify any room for improvement or areas needing attention.

Good credit is the gateway to stellar financial products, including the best interest rates and optimal lending products. With interest rates on the rise, it’s imperative to have your credit in tip-top shape for any lending needs you may have in the upcoming year; it could lead to saving thousands in interest costs. Here are some tips for reviewing your credit:

What’s the difference between a credit score and a credit report? Your credit score is a 3-digit number used by financial institutions to determine how trustworthy you are in receiving credit products. Three credit bureaus — Experian, Equifax, and Transunion — issue them on a scale of 300 to 850, with 850 being the best credit score one could have. Your credit report — a history of all your loans, repayments, and debts — determines your credit score.

How do you check your score and report? Your bank or credit card may provide access to your credit score with a high-level overview of your report. Other options include Credit Karma or AnnualCreditReport.com, which provide weekly reports due to the Covid-19 pandemic.

You can also reach out directly to the credit agencies Experian, Equifax, and TransUnion for specific reports; each agency provides individual scores and reports that can vary from one another, so it’s a good idea to review all three annually.

Once you’ve done your initial check, set a calendar reminder every four months to get a report from one of the three agencies mentioned above to keep an overview of your report throughout the year.  

What to look for? Having a benchmark on your score will help determine any necessary next steps. If your score is lower than you anticipated, it may indicate that there has been fraud on your accounts or something has been misreported. Reading through your report can help you identify anything that needs to be addressed and point out any areas of opportunity and steps you can take financially to increase your score.

If you’d like to learn more about what to look for on a credit report or ideas on raising your score, reach out to us. We can provide additional resources and guidance to help you reach an optimal credit standing.