7 Tips for Checking Your Credit Report & Raising Your Credit Score

Consider This: According to a survey from WalletHub, 59 percent of Americans don’t check their credit reports more than once a year.

But frequently checking scores and reports can be crucially important to financial health. Here are some reasons why it is important to check your credit report more often, and a few tips for raising your credit score.

Why Do I Need to Check my Credit Report?

  1. Your credit report may not be accurate. Checking your report can help you ensure it is correct. That comes in handy when you’re trying to get a credit card or a mortgage. If there is an error, make sure to dispute it with the appropriate credit bureau.
  2. Know where you stand. Consumers who have a good idea of their credit score understand where they stand should they need to borrow money to fund a major life purchase. A low credit score, for instance, could hinder the purchase of a new house or car.
  3. Avoid identity theft. An unusual change in a credit score or report could be the first indicator of identity theft. By regularly checking credit reports, consumers may be able to catch credit inquiries they don’t recognize—stopping a potential fraudulent new account before it’s even opened.

Financial experts advise checking your credit score at least once a year. You may do it more frequently if you’re trying to rebuild your credit or are interested in purchasing a car, home, or get a new credit card. Once a year, you can contact AnnualCreditReport.com online or by phone at 877-322-8228 to receive a free copy of credit reports from all three major credit bureaus—Equifax, Experian, and TransUnion. You will have to provide your address, Social Security number and birth date.

Tips for Raising Your Credit Score

  1. Make payments on time. Payment history is the most important factor considered in calculating your credit score. It indicates to potential lenders how likely you are to pay them back should they choose to lend to you. Consider using automatic bill payments or setting up alerts to avoid missing payments.
  2. Be wise about opening and closing accounts. While it positively affects credit scores to have a wide array of accounts—including credit cards, personal loans, home equity lines of credit, etc.—it can be much more harmful to open more lines of credit than you can keep up with. Falling behind on payments can quickly drag down a healthy score.
  3. Optimize your credit utilization ratio. Your credit utilization ratio is your debt-to-limit ratio. It measures the amount of the credit card limit you’re using, according to an Upgrade article. High credit utilization ratios may cause potential lenders to think you’re overextended and unlikely to make timely payments on future debts.
  4. Dispute errors. If you see something on your report you don’t recognize, don’t assume it should be there. Contact both the credit reporting company and the organization or company that provided the information (your lender or credit card company). For disputes, the Federal Trade Commission recommends sending a hand-written letter with copies of all relevant documents via certified mail.

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