As a recent college graduate who avoids credit cards altogether (I’ve heard one too many horror stories about runaway credit card balances), I’ve never actually taken the time to look at my credit score or credit report, much less place any importance on them.
A survey from Discover shows I’m not alone: 54% of millennials surveyed say that their credit standing is important to them right now, versus 63% of Generation X and 65% of baby boomers. And only 51% of young adults actually believe that they have control over how good or bad their credit appears, compared to 62% of Gen X and 80% of boomers.
Not-so-new news flash: You’re totally in charge of your credit health — and managing it is important, because your credit score and what’s in your credit report can help you achieve major milestones like buying that first home or affording grad school.
That’s because your credit score affects the interest rates and terms you could get on loans and credit cards. (Seriously — do you really want to pay more in interest on a 30-year mortgage if you can help it?) Plus, a prospective employer or landlord can check your credit report to make sure you’re someone who seems responsible with your finances — and you wouldn’t want, say, missed payments on an auto loan hurting your chances of getting a job or apartment.
Keeping regular tabs on your credit score is the first step in knowing whether you’re doing a good job of managing your credit, or if you have room for improvement. The survey even found that 70% of respondents who checked their credit score at least once per month said it had a positive impact on their credit behavior; only 31% of those who checked their score once a year could say the same.
With that said, if you’ve never bothered to check either your credit score or your credit report, now’s a good a time as any to get started. Here's how:
See if your credit card company offers your score. Many credit card companies now provide their customers with their credit scores, free of charge, on their statements. If you don’t see it on your monthly bill, then check out sites like Credit Karma, Credit Sesame or Credit.com.
Not sure what to make of your three numbers? Generally speaking, a poor score is from 300 to the low 500s; a fair score is in the mid-500s to mid-600s; a good score is in the high 600s to low 700s; and an excellent score is considered to fall in the mid-700s to 850.
Request a copy of your credit report for free. You’re entitled to one free credit report a year from each of the three credit bureaus: TransUnion, Equifax and Experian. That means you can technically get three copies of your report in one year. While they’ll likely have a lot of the same information, not all lenders report to all three bureaus, so you may find a few things that are different from report to report. You can request your credit reports at AnnualCreditReport.com.
Check your credit report for errors. If your credit report has errors in it, it could ding your credit score pretty harshly. So it’s important to comb your report to make sure you don’t find anything that seems off. For example, if you’ve been a victim of identity theft, then you may find weird accounts have been opened in your name on your report. Or if you know you paid your cellphone provider on time every month but they reported missed payments, then it’s important to get that corrected so your credit score isn’t penalized.