5 Reasons You Need to Know Your Credit Score
TweetAccording to a survey by The Association of Credit and Collection Professionals, not only do most Americans not know their credit score, but they also have a limited understanding of how credit scoring even works. It’s one little number with such a big impact on our financial lives. Of course our credit score factors into so many areas of our lives, but you might not even be aware of some of the ways it can affect you. The following, for example, are just some of the reasons why keeping an eye on your credit score is an absolute must.
1. New Information Sources Not Previously Used in Credit Reports
It looks like FICO will soon be using two new data sources so that more people can have a credit score.
FICO will be using a national utility database the National Consumer Telecom & Utilities Exchange (NCTUE) database. There are over 70 cable companies,
cell phone companies and utility providers who contribute to this database. Your payment history is reported into this database, and if you missed utility
payments you could have a negative mark here. The second is LexisNexis, which uses public records to build databases. Specifically, FICO will be using
address records to determine how often people move houses as a predictor of risk.
Using these data sources, FICO will be able to determine if you pay your utility bills on time and if you move around a lot. Frequent moves would be
viewed negatively in their model.
2. It can help you spot fraud
Monitoring your credit report multiple times throughout the year and keeping an eye on your overall score will help you quickly determine if something seems off. For example, if someone has opened a new credit card in your name, run up a large bill and not paid it off, those changes will be reflected in both your report and your score. The sooner you’re aware of any fraudulent activity, the sooner you can report it and be on the road to recovery.
3. It can cost you money
How can a credit score cost you money? People with low scores are more likely to pay higher interest rates on things like credit cards, loans and mortgages, which can really add up over the months and years. Start working on building your credit up so that you can qualify for better offers, and then look into some of the credit cards out there that offer better, lower rates.
4. It can keep you from reaching your goals
Whether it's homeownership, a new car or paying off debt, the roads to all of these goals start with a good credit score. Lenders in any circumstances will always want to assess your credit risk level, which means they'll be doing their due diligence to look into your credit score and credit history. A low score could mean more time between you and that dream home or more time on the bus before you can afford a car, or it could keep you from being able to borrow money to pay off debt (personal loans and balance transfers are two great ways to start paying down debt, but you’ll need a good credit score to make you eligible).
5. It can have an impact on your employment and other things outside of your finances
While it's relatively rare, potential employers can perform credit checks on job applicants, and the better the score, the better you look. Companies
may also request a credit history when you move into a new home and try to set up utilities or request an insurance quote, or when you apply for a new
apartment. These companies want to gauge how likely you are to pay your bills on time, and checking your credit score and history is an easy way to
do so.
Obviously your credit score is important for many reasons, so finding out your number today is a great way to get started. If your number is low, don't
fret – you can always improve it.
Try 1 month of free monitoring at www.CreditReportsToGo.com - it's simple
