Understanding your credit record is essential for managing your finances effectively. It’s important to check your credit score at least once a year, not just when applying for finance. But how can you do this?
In this blog, we will discuss how to check your credit score and why you might want to make it a regular habit.
What is a credit score?
Credit agencies collect information about your finances from public records, service providers, and lenders.
Your credit score can highlight how you manage your finances and if you are expected to make repayments on time. When applying for finance, a higher credit score may improve your chances of being accepted.
It can determine your chances of getting:
- Credit cards
- Loans
- Mortgages
- Car finance
- Gas and electricity monthly contracts
- Mobile phone contracts
- Insurance plans
- Retail credit
How do I check my credit score?
There are three credit agencies where you can access your official credit report. These agencies are Equifax, Experian, and TransUnion.
The process is quite straightforward. Simply visit the website of any of these companies to access a free credit check. You will need to provide some basic information to fill out the form. Once you have filled out all of your personal information, you will be given your credit score.
When should I check my credit score?
It is recommended to check your credit report annually to ensure it is healthy and accurate, and that there is no unfamiliar activity.
There are multiple different situations where you may need to check your credit score, for example, when you’re:
- A victim of identity theft - Check the information is accurate and there isn’t any unfamiliar activity.
- Missing repayments - If you have missed repayments, you may want to check if it had an impact on your credit score.
- Wanting to rent a property - Landlords will usually look at your credit score, so it might be worth checking yourself.
- Applying for finance - Checking your score can help you determine the chances of your finance application being successful or denied.
- Wanting to check or improve your financial health - You can use the information to track progress and identify how you can improve your credit score.
- Struggling to get accepted for finance - If a finance application is rejected, check your credit score to understand why you were rejected and see how to improve it.
Should I check all three credit reports?
It may be worth checking all three credit reports once a year as they can be different and all have an impact.
All three of these agencies collect and maintain your credit information, which is used to calculate your credit score. While each agency may have slightly different data and scoring methods, it's recommended to check all three.
Each agency allows you to access your credit report for free once a year. Regularly keeping track of your credit score may help you ensure it is accurate and healthy.
How can I improve my credit score?
You can improve your credit score by doing various different things, including:
- Making payments on time – Consistently paying your bills on time can improve your credit score. Missing payments can negatively impact your score.
- Check your credit report – Checking your credit report regularly allows you to keep track of any errors or unfamiliar activity. You can dispute incorrect information, which may boost your score if they are corrected.
- Reduce your credit card balances – Paying off your credit card balances and debts may improve your score.
- Limit credit applications – When you apply for finance, lenders might do a hard credit search. There is a risk that a hard search may lower your credit score, so you want to avoid making lots of applications at once.
- Negotiate repayments – If you’re struggling to make repayments, negotiate with your lenders to get a more suitable repayment plan.
Summary
Reviewing your credit score regularly is a key step in managing your finances. It is important to remember that your credit rating can change over time; so it can go up and down. Therefore, it is wise to keep your credit score in mind when making any financial decisions.
