Monitoring your credit is an important activity that many people skip. Your credit score, the three digit reflection of your creditworthiness, can have a big impact on various aspects of your financial life.
Access to loans and credit cards
Creditors look at credit score to help them determine how likely you are to pay back your loan or make your credit card payments. A low score may limit your ability to access credit opportunities for you or your business.
Your interest rate
Your interest rate may change depending on your credit score, making things like mortgages and car loans more expensive if your credit score is low. Your low credit score can end up costing you money in the terms available to you.
Housing, insurance, and more
Some landlords use credit score to determine what candidates they want to rent to. In a competitive market like the Bay Area, a higher score may help you access more housing opportunities. If you have car insurance, homeowners insurance, or others, you may end up paying more if you have a low credit score. Improving your credit score may help you access more affordable monthly payments.
What to look for
Are there any mistakes in your personal information (name, social security number, etc)? Do you have accounts listed that look unfamiliar? Are there credit inquiries you don’t recognize? Are there collections or other items that don’t look familiar to you? If so, taking action as early as possible correct these or get them removed can have an impact on your long-term credit. Even something as simple as a parking ticket you forgot to pay can stick on your credit report for a while.
Resources to monitor your credit score
Banks are beginning to offer access to your credit score and sometimes credit reports. You can also access your score from the three major credit bureaus for a fee (FICO, Equifax, and Transunion).