Make A Resolution To Track And Improve Your Credit Score This Year

We increased our principal debt payment from $20,000 to $25,000 last year.  It might not seem like a lot, but our income was lower due to having twin boys in May.  One of the ways we were able to do so well paying off debt, is thanks to excellent credit scores.

When it comes to looking at your credit score, you may not really understand it.  I know that only a few years ago, I had no idea how credit scores really worked.  But to improve your score, you need to understand how it is calculated.  The score is based on a range of factors that generally consider how you’ve handled having credit during your life.

A better understanding of your credit score, enables you to adopt better habits that will improve your score.  If you take a look at your credit report, you will see that it is essentially a summary of all your previous lines of credit, with records of payment and late payments, as well as any other debt you may have accrued over the years.

It can be a little confusing looking into your credit report for the first time, so you may want to get best credit repair services to help you understand it better.  The first step is to look through every single line of your credit report and identify any areas which there could be a mistake.  A mistake could be someone else’s credit account recorded in your name or it could be personal details which are wrong.  Any mistake can affect your credit score in a negative way, so it’s important that you monitor your credit report and make changes where needed.

If you take a look at what it is that goes into your credit score, you will see that there are five main elements:

• Payment History: a list of every payment you have made in regards to credit. 
• Amounts Owed: any debts you may have outstanding.
• Years of Credit: how long you have held certain accounts. The longer the better because it proves you can be trusted with paying back what you owe.
• New Credit: How many accounts have you opened recently, and how many lenders have inquired about your credit? The more activity, the more it appears you’re about to go on a debt binge.
• Types of credit: The mix of accounts you hold, such as auto loans, credit cards, student loans, or mortgages.


Do You Need Credit Monitoring?

Credit monitoring is all about making sure that your credit card numbers are not stolen or debt wrongly recorded, which can affect your credit score.  The whole idea behind it is that you want to have your credit report monitored so that if something unusual crops up on your report, you find out about it right away, and can keep your credit score from being damaged. 

I used to think that credit scores only mattered when you were buying a new house or applying for a new credit card.  As someone who was paying down debt and not planning on moving anytime in the near future, credit scores didn’t seem all that important.  However, as we paid down the balances on our credit cards, our scores kept moving up.

All of a sudden we both had “Excellent” credit scores.  These scores helped us be approved for a consolidation loan for the credit cards and for refinancing of my student loans.  These new loans were at a much lower interest rate.  Now, we’re paying more towards our principal and less towards interest.

If one of your resolutions for 2018 is to improve your finances, a great place to start is with your credit score.