The Importance of Monitoring Your Credit Score
October 25, 2023
Those three numbers that stare you down whenever you open any credit-checking app or website sure can seem intimidating.
Well, what’s that mean? Can I buy a home? A car? Can I get a loan at all?
Easy, easy. It doesn’t have to be so scary. With regular monitoring, your credit score won’t be something you shriek when you see; it’ll be something you understand and can use to your benefit. That’s what is so concerning about credit scores, right? The complexity of it all... Well, to help you better understand your credit score, let’s define some terms and focus on three of the main reasons you should keep tabs on those three numbers.
Credit Report and Credit Score: What’s the difference?
A credit report is a statement that has information about your credit activity and current credit situation—such as loan paying history and the status of your credit accounts. Your credit scores are calculated by the three major credit reporting agencies (Equifax, Experian and TransUnion) based on the information in your credit report. Each of the three credit bureaus will independently calculate your credit score, so you may actually have slightly different scores at each place. (CFPB)
- Credit Score = Financial Health
To put it simply, it’s impossible to know where you truly stand financially without checking your credit. Sure, your checking or savings account may be at an all-time-high, but more likely than not, there’s not enough to go purchase a home outright in there. So, in order to do that, you’ll need a loan, and before you can get that loan, someone’s going to look at your credit.
That’s what it all boils down to—your credit. It determines if you’ll qualify for a loan, what your interest rates and fees will be, how much different deposits will cost, and so much more. It affects your everyday life in so many ways.
So, it’s extremely important to understand where your credit stands. That way, if work is needed, you can better plan out your next steps to raise it.
- Help Catch Identity Theft Early
According to the National Council on Identity Theft Protection, there is a new identity theft case every 22 seconds. Much of this is due in part to the wide range of identity theft methods.
While these are frightening numbers, there is no need to fret. By regularly checking your credit, you are giving yourself a much higher chance of catching this early. This is so crucial because the earlier you can catch it, the more damage control you can do. If inaccuracies stay on your report for too long, your score can be drastically lowered, and because of this, you could get denied from various credit-related applications.
In the event you do find suspicious charges on your credit report, dispute them as soon as possible. You can do this by reporting these fraudulent charges with each individual credit bureau to have them removed from your report.
- Identify Errors
In some cases, there can be other mistakes on your credit report than fraud. In a study by the Federal Trade Commission, they found that 1 in 5 people have at least one error on one of their three credit reports (Equifax, Experian, and TransUnion).
These mistakes can make it much more difficult to get competitive rates on credit cards, mortgages and auto loans. So, thoroughly checking your credit report, as well as staying up to date on the score itself, will help you catch these mistakes and make sure they don’t have a long-lasting effect.
Your credit doesn’t have to be a rainy cloud hanging over your head—so don’t let it be! With TVFCU, it’s never been easier to keep tabs on your credit score. With YOUR$, you can monitor your credit score directly through mobile or online banking with SavvyMoney (WITHOUT negatively impacting your score!). Additionally, SavvyMoney provides tailored tips to help you improve your credit score! We at TVFCU make your financial freedom our priority, so stop guessing at your credit—watch it progress with YOUR$!