Start Your New Year Out Right: Get a Credit Check!

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Checking your credit report with TransUnion, Experian, or Equifax is not only free, it’s an important first step to getting your finances in order.

Hey you! What’s your credit score?

It’s a new year full of new financial possibilities. So if you don’t know the answer to that question, it’s probably time for you to figure out where you stand financially. How? There a couple ways to do this. Take a look at your credit report, which lists all your inquires, available credit and past due accounts, or take a peek at your credit score, which is essentially that report in number form.

Building good credit is one of the best ways to prepare yourself for a successful future, but sadly, many people actively avoid checking their credit scores because they’re worried about what they’ll find. According to a recent survey, 37 percent of Americans haven’t checked their credit in at least a year, and 16 percent of Americans admit to never having checked their credit—ever!


Credit checks should be common.

While ignorance may feel like bliss for Americans who live without knowing their credit score, the truth is that these people are putting their financial futures at risk. Whether or not you know your score, you use it all the time. When you apply for an apartment, a job, a credit card, or a mortgage, your credit score is used to determine whether or not your application will be accepted or how high your interest rates will be.

Additionally, the FTC recently found that one in five credit reports include an error that can significantly decrease your score. If you’re not regularly checking your official credit reports, you have no way of knowing whether your score is even accurate!

“You need to make sure the accounts and any other information listed on your credit report as your own is correct,” said Lucy Lazarony (@lucy_lazarony), a personal finance author and former Bankrate staff writer. “Having an unpaid account on your credit report that’s not yours can hurt your credit!”

“It’s also a good idea to check your credit often to protect yourself against identity theft, which happens when a thief steals your personal information and opens up credit accounts in your name. You’re not responsible for a thief’s bills but you will need to take steps to clear your credit report of a thief’s handiwork.”

It’s free and it’s easy.

That’s the good news. And the bad news is … well … there really isn’t any bad news. It’s easy and it’s free. Good news all the way down, baby!

The government-sanctioned site AnnualCreditReport.com offers free annual copies of your credit report from all three major credit bureaus: TransUnion, Equifax, and Experian. You can get them all at once if you want, or spread them out every four months to get a thrice yearly update. However, your report will not give you your credit score.

To find out your score, you can sign up for a free credit monitoring service with a bank-backed site like Chase’s Credit Journey, or even one of the credit bureau services, like Experian’s CreditWorks, if you want to track your score day-to-day. you might even get a free credit score through your online checking account!

“Monthly monitoring is a good way to stay on track if you are working on building up a credit score,” said Lazarony. “If you’re not in the market for new credit, checking your credit report two or three times a year is a good strategy.”

Set some goals.

What should you be striving for? The average American credit score has been rising, hitting 700 for the first time ever back in July. But that’s still a fairly average score. In general, this is how credit is gauged:

  • 720-850 = Great Credit
  • 680-719 = Good Credit
  • 630-679 = Fair Credit
  • 550-629 = Subprime Credit
  • 300-549 = Poor Credit

If you have bad credit or poor credit, life can be tough. If you can get a loan at all, your interest rates are gonna be much higher. And you may be unable to access the kinds of financial lifelines—like credit cards and emergency loans—that someone with better credit has at their fingertips. The good news? While it’s certainly not easy to build your credit, it’s more than possible.

Raise that score!

First, scour your credit report for errors or accounts that don’t belong to you. If you find something, report that to the credit bureaus. Getting fraudulent or mistaken information off your credit report can help raise your score significantly.

Second, take care to put all utility bills and recurring monthly payments on auto-pay, so you won’t accidentally miss a payment and ding your credit score in the process.

Third, if you don’t already have a credit card, look into to getting one with no annual fee, and paying it off in full every month. This will help build credit quickly, so long as you don’t abuse it and rack up debt. Try using it only for a few recurring monthly payment. If you can’t get one with cash back rewards try starting out with a secured credit card.

Lazarony says when shopping for a secured credit card, you should look for one that doesn’t nickel and dime you.

You want an affordable interest rate and a low annual fee,” she said. “Before you apply, ask yourself: is the card from a major issuer? The aim is to graduate to an unsecured card as soon as you can and a big issuer will have a variety of low-cost card options. Avoid applying for secured cards with monthly or application fees. You don’t need to pay that much to establish credit!”

You can also take out a credit-building loan or try to become an authorized user on the credit card account of someone with good credit.

For even more help with credit building, check out these related pages and articles from OppLoans:

How often do you check your credit score? We want to know! You can email us or you can find us on Facebook and Twitter.

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Contributors

lucy-lazarony-headshotLucy Lazarony (@lucy_lazarony) is an experienced personal finance journalist. She was lucky enough to begin her online writing career as a staff writer for Bankrate.com in 1998.

A freelance writer since 2004, Lucy writes on a variety of personal finance topics for websites such as Credit.com, CardRatings.com, MoneyRates.com and The National Endowment for Financial Education.

She writes accessible and easy-to-understand articles on credit, debt, budgeting, credit cards, prepaid debit cards, retirement, insurance and savings.

Her personal finance writing has appeared on MSN, Fox Business and Forbes.com.