People often think checking your credit score could negatively affect your credit score or hurt your chance of getting a new loan. This statement is 100% incorrect. Acquiring a copy of your own free credit score will neither help nor hurt your credit if you get it from a reputable online reseller like credit karma or https://www.efreescore.com. This “self-disclosure” is seen as a non-event since you’re querying for your own personal knowledge and not to lend money to someone else conducting a loan request. This makes this type of request a non-official inquiry. Building on that, you could check your report every week and it wouldn’t alter your report any. How often you query your score is irrelevant.
Along with self queries there are others that also will not hamper your credit report. One of these examples is an account review by current creditors. Often creditors will pull your file a few times per year to insure that you’re keeping a similar credit risk or improving your credit. Another inquiry that won’t alter your score is a promotional inquiry. These are queries requested by companies that have purchased your information without your knowledge and wish to pull your credit score to consider soliciting you for a credit offer or advertising purposes.
Since a “self inquiry” does not harm your credit score, it’s a very good idea to perform one every month or every couple months. Querying your credit rating every month or so will let you see how your score is changing and adjust your lifestyle based on the result. It will also allow you check for any anomalies in the report such as displaying who has recently queried your report and if there are any collections currently exist. Seeing collections early allows you to react appropriately and handle them before they become a serious detriment to your score.
With no downside to querying your credit score every so often, it’s absolutely something that you should consider doing. Most companies offer a very affordable monthly plan allowing you to monitor your score and help you with correcting problems and continuing to build a solid credit score.
Collections on your credit report are probably the most hurtful aspect to have on an otherwise in good standing credit score. Collections are any unpaid bills that a collection agency has been hired by the service provider to collect the payment from you. Many times these collections are unknown to you due to you changing address, updating your phone number, or the creditor simply having false information for you. What this then becomes is a blemish on a score that can hurt you anywhere from a couple points to 100+!
According to Craig Watts of the company Fair Isaac, which is the company that compiles the FICO credit score, “Having a collection account on your credit report is statistically significant for predicting future delinquency, what you do later on what that account doesn’t change its significance to the scoring formula.”
This is to say that, your score can still go up with a collection on it, but it will remain significantly lower so long as the collection remains.
So the obvious next question should be “what can I do to insure that collections don’t hurt my score”. The obvious answer is to never let a bill go unpaid. Often though, as previously stated, collections often get added without your knowledge due to a communication issue by the lendor or service provider. So along with paying all bills you have knowledge of, it’s a good idea to check your credit score every month or two to keep a keen eye for any changes or inconsistencies. You’ll want to use a reliable site to check your free credit report and get credit monitoring so that you will be alerted when a collection shows up on your report.
Generally when collections are caught and resolved quickly you can work with the creditor and collection agency to get the collection removed from the report. If the collection isn’t handled quickly, collections take 7 years to fall off your report and will continue to harm your credit score through that time. Checking your own credit score utilizing a credit checking service doesn’t negatively affect your credit score, this makes it extremely important to get credit monitoring configured and check your credit score every month to insure that collections and other problems do not build and wreak havoc on your credit score.
Repairing bad credit isn’t something that just naturally happens. If your credit less than perfect, there is a reason for that. Without making changes in your financial habits or paying off debts, your credit won’t magically get better. It is a good idea then for you to have a plan of how to raise you credit and stick with that plan. Putting the plan onto paper can also help you to keep motivated to continue with the plan as well. Each person’s plan will differ based on previous experiences, but there are 3 key areas that should exist on every person’s plan.
First, pay down or pay off any outstanding bad debts. Things like mortgage loans or student loans aren’t necessary to be paid immediately, but credit card balances can cause serious havoc in your financial life. Be sure to pay these down as aggressively as possible or pay them off entirely if it is feasible.
Second, make a conscious effort to pay bills on time. Whether it means setting up reminders on your phone for when bills come due, asking a family member to remind you, or pinning a note to your fridge, be sure you know when you need to pay bills. Many companies will also have an auto-draft feature that will pay your bills for you each month without you needing to remember. If you are sure you will always have the funds available when its due, its a great option to consider.
Lastly, try to cut down on as much “frivolous” spending as possible. This would be expenses like pricey clothing, going to the movies, and fancy dinners. Instead opt for shopping at department stores, renting a move, and making dinners at home. The money you save from doing this can then be moved to paying off bad debt faster which allows for more money for you in the long run (due to not having to pay absurdly high interest rates) and an increased credit score.
Take the time to make a plan, write it down, and stick too it and you will begin to see a drastic improvement in your credit and your finances as a whole in no time at all.