Everyone has numbers they know by heart – from birthdays and Social Security numbers to addresses and phone numbers. But there’s another number that is just as important that you might not know—your credit score.
Your credit score can influence your credit card interest rate and credit line, insurance rates, ability to buy a house, secure a loan or even get a job.
Lenders reference credit scores when gauging the probability of a borrower defaulting on a loan. Reliable borrowers are less likely to default on payments – and more likely to have favorable terms when they do borrow.
In this case, what you don’t know can hurt you—but if your score isn’t where you want it to be, you can follow some simple steps to improve it.
Your credit score is based on information in your credit reports at the three major credit bureaus: Equifax, Experian and Transunion. These three bureaus track things like loan payments and balances, credit use, length of credit history, late payments, bankruptcy, foreclosures and repossessions.
Your score will reflect the information in your credit reports – whether it’s accurate or not – so it’s important to check your reports regularly. You can check your reports at the three bureaus for free once every 12 months at annualcreditreport.com.
If you notice errors, contact that credit bureau to learn how to correct them before you make any financial decisions.
Once you’ve reviewed your three credit reports, check your credit score. Your free credit report does not include a credit score. You can purchase a score directly from the credit reporting agencies and scoring companies and many lenders now provide access to your current score with no fees.
Paramita Bandyopadhyay, PNC’s general manager for consumer credit cards, says young people and people who are new to the country don’t always have a credit score. If that’s your situation, it is important to obtain credit (if you haven’t already).
“PNC is one of few banks that allows customers to use a co-applicant while applying for a credit card. Applying with a co-applicant can help people get credit while they are attempting to build a credit history,” she said. “Start building your credit history, use it responsibly, and most important, always pay your bills on time.”
Bandyopadhyay also offers these 5 tips to improve your credit if your score is lower than you’d like:
Keep in mind that while your credit score is an important indicator of whether you will repay borrowed money, a good score doesn’t entitle anyone to a loan. Your income, financial assets and other debts also are major factors in whether you’re approved.
Learn more credit score myths and facts »
The best way to improve your credit score is to develop consistent, responsible spending (and bill-paying) habits.
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