There’s a lot to know about your credit score. First off, what is it and why does it matter? Simply stated, a credit score is a number that helps lenders determine how strong of a borrower you are. It’s a tool they use to predict how likely it is that you will pay back a loan in full and on time. The most commonly used credit scoring system is the FICO Score (here’s what it is and how it works).
Lenders use this information as a factor to decide whether to approve or deny your loan application, and determine your interest rate. Usually, the higher your credit score, the more likely it is that the lender will approve your loan application, and offer a favorable interest rate. That’s because lenders trust that they’re not going to lose money by lending to you, and they don’t need to secure the loan with interest. You can learn more about how you can earn a winning credit score here.
In addition to taking specific steps to build your credit score, there are ways to protect it. One of them is to regularly monitor your credit score and credit report.
Your credit score is different than your credit report, though they’re connected. Experian (one of the three United States national credit bureaus – the other two being TransUnion and Equifax) sums it up this way:
“Credit reports reflect your credit activity, while credit scores represent a calculation of that activity.”
When you know what’s on your credit report, you can have a better understanding of the factors that make up your credit score.
Here are three reasons it’s important to routinely check your credit report.
1. Prevent fraud and protect your identity
When you look at your credit report, you will see four categories:
- Personally identifiable information (PII)
Includes your name, address, and employer
- Credit accounts
Your mortgage, credit cards, or auto loans, along with the date opened, credit limit, and balance
- Credit inquiries
Credit checks that you give lenders permission to see when you apply for a loan of credit product with them
- Public record and collections
Information collected from state and county courts, including bankruptcy and other public information
As you review your credit report, you should verify your contact and other personal information, confirm your name is spelled correctly, check who has inquired about your credit, and look for any unusual activity. For example, did an unknown or suspicious-sounding company inquire about your credit? Does the report show you applied for or opened a new credit card, but you know that you did not?
Dispute these items with the credit bureau and take steps to ensure you are not a victim of identity theft. If you ever believe you are a victim of fraud, please change your account passwords (like online banking) and call your financial institution right away. If you are a Vantage West Member, call us at 800.888.7882. You can also see many more tips to protect yourself against fraud at VantageWest.org/FraudCenter.
For more details about your credit report and what to look for, see this article from MyFico.com.
2. Be aware of where you stand with credit bureaus, and what you qualify for
Knowing what the credit bureaus are reporting about you is an important part of a healthy financial life. You can dispute any inaccurate data, know what lenders will see when you apply for loans, mortgages, or credit cards, and make sure your financial plans align with your current reality.
The benefits of a high credit score include lower rates and better loans, which can empower you to purchase reliable cars, save money on rent or mortgages, access the best credit cards, and get discounts on services like insurance.
When you routinely check your credit, you empower yourself to stay informed on important information that directly impacts you, rather than waiting for someone to tell you about it. If you have a high credit score and are not taking advantage of the benefits, you can make decisions to change that and save money.
3. Identify areas of improvement or steps to keep taking
Conversely, if you monitor your credit report and find items that show you why your credit score is lower than you’d like, you can make changes to improve your score.
When consumers do not monitor their credit reports, it can be difficult to know why their credit scores are what they are. But when you actively review your credit report, you know exactly what is making up your credit score.
There may be a minor balance left on a card you thought was paid off, so you haven’t been paying, and now your payment is late.
There might be a store credit card you opened for the discount at the point of sale, but forgot to pay off and now the balance is growing with interest.
Situations like these lower your credit score. For more on what the score is composed of and how to build yours, check out our blog here.
On the flip side, you might have a high credit score, and see why when you check your credit report. Your amount owed, payment history, credit history length, new credit, and types of credit used might be exactly where they should be. If that’s the case, congratulations! You know to keep doing what you’re doing.
Credit Central can help
Available to all Vantage West Primary Members is a robust tool inside online and mobile banking, called “Credit Central by SavvyMoney.”1 Whether you log into online banking through VantageWest.org or the mobile app, you can take advantage of the benefits of Credit Central.
Our purpose is to invest in people today to achieve a more prosperous tomorrow. That’s why we chose a tool that is free to our Members and does not impact your credit score. You can view your credit score and report as many times per day as you choose, and it will never reduce or otherwise impact your credit score.
Enjoy these features inside Credit Central:
- Credit score
When you launch Credit Central, you will see your current “rating,” or credit score. You’ll see if your credit score dropped or increased since the previous month or the last 24 hours, depending on how frequently you’d like to refresh your score. Credit Central will also show you how your score compares with other people’s scores in your ZIP code. You can see what’s changed – for example, if you got a new credit card, that will show. You can see what’s positive and negative about your score, with suggestions on how to build your score.
- Credit report
You can access your credit report anytime, and at any place where you have an internet connection. Just click the “Report” tab. You will see how many total debt accounts are associated with your name – both closed and opened. You will see the balance, credit limit, and credit utilization (how much you owe divided by your credit limit – you want to keep this below 30%). You can access public inquiries, public records, and a summary – which shows a snapshot of your total open accounts, total closed accounts, total balances, monthly payments, credit inquiries, and more.
- Credit monitoring
When you click the “Monitoring” tab, you will see an option to receive email alerts with changes to your credit. Members will receive real-time notifications for any credit inquiry, updates for any new or closed trade lines, and a score update every 30 days.
This section connects you with the best auto loan or personal loan options based on your credit. We take some of the research out of loans for you.
For auto loans, you can use the built-in calculator to input the loan amount and loan term (for example, $25,000 and 51 months) for a new or used car, to see what annual percentage rate (APR) you qualify for, and what your estimated monthly payment would be.
Similarly, for personal loans, you can use the built-in calculator to input the loan amount and loan term for either a new personal loan or debt consolidation loan. This helps you estimate the monthly payments and APR.
All of these options include a built-in application so you can apply within Credit Central, and not have to worry about going to another website or filling out paperwork.
The “More” tab gives you access to the “Your Money Blog,” a place to learn more about credit, debt, saving, spending, and how to protect your money in real-life scenarios like divorce, student loans, online shopping, and more. You can also find your settings and frequently asked questions about credit scores, credit reports, and building credit under “More.”
How to access Credit Central
If you haven’t signed up for Credit Central yet, you can do so now in online banking (Click “More” then “Credit Central” then “Launch Credit Central”).
If you have any questions, you are always welcome to contact us through Message Center inside online banking, chat from VantageWest.org, or call us at 800.888.7882.
Federally insured by NCUA. Membership required. Some products and services are subject to approval. Certain restrictions apply.
1 Available only to Primary Members. Not available on all accounts. Certain restrictions may apply.
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