Why you should know your score
Looking to purchase a new car? Or maybe you're looking to apply for a loan? If so it is a good idea to know your credit score first. Many times checking your credit score is a good indicator of the type of interest rate you might have to pay, and if you will be approved or not.
You might be wondering, "How can I check my credit score"? You can check your what is a good credit score score for free from the three major credit reporting agencies (Equifax, Experian, TransUnion). This is done by accessing each individual website due to the differences in reporting.
A major reason you check all three is because Credit Reporting Agencies are "subscription based". Let me explain this in more detail. Creditors (dealerships, mortgage companies, American Express, etc,) subscribe to credit bureaus to check and report information on their clients (such as late payments, defaults, etc.). There are times when a company may report information to one bureau and not the others. This is one of the reasons your score differs (there are others).
The range of your credit score could be between 350 to 750 points. Remember, the higher your score is the better your chances of an approval. A good credit score is a minimum of 700 points. Anything below this mark you will need to improve upon.
By routinely checking your credit score you can search for errors. 80% of the information reported to credit bureaus is erroneous information (dated, inaccurate, or plain incorrect). When you find this incorrect information you will need to take a couple of steps to correct it.
You have the option of contacting the credit bureau directly by phone or letter. With either method it is wise to send copies of supporting documentation in the mail to the corresponding bureau (the credit bureau that shows the error) along with a letter detailing the incorrect accounts.
Once your information has been received by the credit bureaus the creditors will then have to investigate your claims. If nothing is produced during this investigation (usually they are given 30-35 days to conduct the investigation) the errors are removed and you are sent a revised copy of your credit report free of charge.
However, if the information on your credit report is correct you will need to take steps towards removing it. Unpaid loans, late payments on your credit card all play a factor in lowering your score. Usually it is possible to contact the creditor directly and setup payment arrangements. Once paid off the creditors can then update the information at the credit bureau improving your credit score.
I have seen a lot of things in my years assisting individuals with self credit repair. There are some things you should avoid. One of these things is disputing truthful and factual information. There have been many so-called "credit-specialist" who will tell you to do this to improve your credit score. Remember, disputing factual information that you know to be true is fraud. If you are accused of fraud you can be prosecuted, fined or even imprisoned.
In conclusion, it is vital that you know your credit score. It can be the difference between approval of a loan request or a new car.