Having good credit is one of the most important aspects of your financial picture. You need credit for almost everything that you do. Want to buy a new car? Let’s take a look at that credit score. Want to buy a home? Again, we’re going to need to take a look at your credit score. Everything even down to setting up utilities or getting on a cell phone plan requires some sort of credit. If you don’t have good credit, you may still be able to achieve most things, but you’re going to have to be prepared to pay some hefty deposits or high interest.
I’ve worked in banking for over 5 years and the biggest thing that I’ve learned is that regardless of how poor your credit is, there is always a way to start fixing it or building it. Depending on your situation it can be overwhelming, but you just need to know the right steps to take. You may not see results right away, but you just have to keep that end goal in sight. Every little step that you take will have an impact over time.
But how do you know where your credit stands? Do you know what is impacting your credit score, both positively and negatively? You need to find something that you can use to monitor your credit report on a regular basis (at least quarterly). In order to start building or repairing your credit, it is important to know exactly what it is that you need to be focusing on.
If your situation is anything like mine was, when I started rebuilding my credit every penny counted. I couldn’t afford to pay for a subscription. So I was definitely looking for a free service. If you scour the internet, you can always find a “Free Annual Credit Report” which can work if you’re only looking to get it yearly. But if your credit isn’t that great, then you should probably be viewing it more frequently than that. Not only that but it’s probably for only one credit bureau. Credit Karma is a free tool that I’ve been using for a long time to monitor and keep up to date with my credit report. It tells you what your score is for 2 of the 3 bureaus as well as whether your score is good or bad. It includes what debt you have and if your accounts are in good standing. It has really helped over the years to stay on track by staying informed.
Another option that I utilized after I was able to afford it, was Identity Theft Protection through my bank. The plan I got included a monthly update to my credit report. It detailed everything that was impacting my score and covered all 3 bureaus. It included everything that Credit Karma had as well. I would also receive email alerts if anything about my score changed drastically. The plus side to doing it this way, was that it also notified me if anyone else was using my credit. Anytime there was a hit on my credit, I would receive an email just in case it was somebody else using my social security number.
Monitoring my credit score on a monthly basis really helped me identify where my problem areas were and also helped me educate myself on what aspects had the biggest impact on my overall score. For me, when I know that something is a problem, I tend to try to avoid it. For whatever crazy reason, I think that if I don’t look at it then it will go away. HAHA yea right. I wish that were the case. But seriously, no matter how bad you think it is, you can always work to improve it. You just have to know where you stand so that you know what you need to take care of first. This was step 1 for me in jump-starting my score from the high 500’s to over 700.