Understanding your credit record is essential for managing your finances effectively. It’s important to check your credit score annually, not just when applying for finance. But how can you do this?
In this blog, we will outline how to check your credit score and why you might want to make it a habit.
What is a credit score?
Credit agencies collect information about your finances from public records, service providers, and lenders. A credit score is essentially a number that shows how well you manage your money.
When applying for finance, a higher credit score may improve your chances of being accepted, as it shows lenders you're good at managing your money.
It can impact 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 easy. Simply visit the website of any of these companies. You will need to provide some basic information and fill out their forms. Once you have filled out 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 make sure it is 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 may 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 may have been rejected.
Should I check all three credit reports?
It may be worth checking all three credit reports, 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.
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 good to keep your credit score in mind when making any financial decisions.
