Top 6 questions to ask yourself about your credit score

Your credit score isn’t just a benchmark for lenders.

When your financial reputation is on the line, evaluating your credit situation and keeping track of your score should be at the top of your mind.

Whether your score is in the 500s or the 800s, ask yourself these questions to stay on top of your report, boost your credit status and open to new financial opportunities.

1. What’s my credit score?

Knowing your credit score is an essential part of managing your finances. Like your budget and your bank account balance, you should check your credit score on a regular basis.

There are a few important reasons to keep an eye on your credit score. By reviewing your credit score regularly, you’ll catch what might be pulling it down, whether it’s a payment you missed, a credit card balance edging a little too close to the limit or new inquiries you didn’t approve of. This can help you stay on top of your accounts, address missed payments and catch fraud.

Knowing your credit score can also help you work toward your credit goals and maintain your score. If you’re looking to buy a house or would like to qualify for a more rewarding credit card, watching your credit score and finding ways to boost it will help you work toward your goal. Even if you’re satisfied with your score, it’s still a good idea to keep an eye on it and make sure you’re not letting it slide.

How to find your credit score

Viewing your credit score is a fairly simple process. The three credit bureaus — Equifax, TransUnion and Experian — all offer the ability to see your credit report and FICO score, along with tools for improving your score and credit monitoring services.

You can request to see your score from FICO directly or from a third-party service. While this is generally free, you’ll often be signed up to receive offers for loans and credit cards in your personal communications.

You also may be able to view your credit score through your bank or credit card provider. Typically offered as an opt-in service, you can view your score for free through your account online or in the mobile app.

Finally, if you’re working with a credit repair or a monitoring service, you’ll be able to see your credit score through your account. You can even sign up to receive alerts so you can closely monitor your score and know straight away if there are any changes.

2. What does my credit mix look like?

Your credit mix refers to the different types of credit and lending accounts you have on file.

Having a mix of credit accounts — such as a few credit cards and an installment loan like a mortgage — will boost your score more than having just one kind of credit account. This is why it’s important to keep a variety of credit accounts.

Knowing what your credit mix looks like will help you keep track of your open accounts. Simply opening up a couple of credit cards and calling it a day won’t help if you don’t actually use those credit cards. Card companies can close a card for inactivity.

Keeping an eye on your accounts will also help you keep track of your payments and make sure your activity is being properly reported to the bureaus. This can help you catch falsely reported late payments or old accounts that re-emerge as “zombie debt” that can pull your score down.

While having a good mix of credit is beneficial to your score, be wary of opening too many accounts at once or of maximizing your credit limits on too many cards. Having multiple hard inquiries hit your report in a short period of time or driving up your utilization ratio will knock down your score.

Instead, stick to just a few cards and loans, space out your applications and try to pay off the balance in full each month instead of maxing out your card limits.

3. What is my credit score getting me?

Your credit score is the gateway to new opportunities in your financial life, including more credit card rewards, better loan options and saving money on payments.

With every month, your score has the potential to go up, especially as the average age of your accounts increases and you stay on top of your payments and balances.

As your score increases, more opportunities will become available to you. The card you opened five years ago may have been good enough for a score of 650, but with a score of 800, you can qualify for cards with bulkier perks like travel discounts, heftier cashback bonuses and more.

Your score can also help you save money on your existing payments. If you’ve been paying down a loan for a number of years, you may want to see if your score can get you a better rate if you refinance. Checking in with your insurance company and reporting your higher score can also save you money on your premiums.

As your score increases, keep an eye out for good deals. By doing so, you can get more out of your credit cards, save money on interest and recurring payments and take advantage of your score before you need to take out a loan.

4. What are my future credit goals?

Setting financial goals is important to having structure in your personal finances and building toward the future. Part of this includes having goals based on your credit score.

Your credit goals can include boosting your score, qualifying for a certain loan or credit card, recovering from a default or bankruptcy, paying off an existing balance and more.

Knowing what your credit goals are will help you take the steps to achieve them and find the tools you need to succeed.

For example, if your goal is to qualify for a mortgage, you can start researching what loan options are available and what credit score you need to qualify. Then, you can start working on boosting your score by taking out credit-booster loans, working on paying off existing debts or working with a credit repair company.

5. What’s holding me back on my credit report?

Your credit report is what informs your credit score, which is why it’s important to review it often and see how it’s impacting your score.

Several factors on your credit report impact your credit score, both directly and indirectly. The main five that FICO uses for its scoring system include your payment history, utilization ratio, length of history, credit mix and new credit inquiries, all of which can contribute positively or negatively to your credit score.

When reviewing your credit report, you’ll want to watch out for entries that can seriously bring down your credit score, including:

• Missed or late payments. While catching a late payment a few days after it’s due can save your score, payments past 30 days due can be reported to the credit bureaus. This includes loan payments, card card payments and utility payments. Late payments stay on your report for up to seven years.
• Hard inquiries. Lenders and credit card companies will submit a hard inquiry to pull your credit score when you apply for a loan or card. One hard inquiry can knock down your score by a few points. Several in a short span can quickly pile up.
• Carrying a high balance. If you regularly spend close to the limit on your credit cards, or carry a high card balance and only pay the minimum, you’ll be penalized on your score. Paying down your debt and keeping your balance low will help boost your score.
• Closing an account. If you pay off a debt or close a credit card, your credit score can take a dip. This is because your overall utilization limit will decrease, your credit mix may lose a little diversity and the average age of your accounts will decrease.
• Filing for bankruptcy. Bankruptcy can seriously damage your credit score and stay on your credit report longer than a missed payment, depending on the type of bankruptcy filed. Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 bankruptcy will stay on your report for seven years.
• Having debt in collections. If you become delinquent on your debt and it’s sold to a collections agency, your credit score can take a serious dip. Debt in collections can stay on your report for up to seven years.
• Not using your cards or taking out loans. If you’ve paid off all your loans and stop using your credit cards, the credit reporting bureaus will have little activity to report and lenders won’t have any recent criteria to evaluate you with. Card providers can also close cards you haven’t used in a certain period of time, which can lower your utilization ratio and credit mix.

While it’s not always possible to avoid a negative entry on your credit report — you’ll need to have a few hard inquiries if you want to take out a loan or a card, and it’s better to pay off debt — keeping an eye on your report will help you decide what you can fix, what you can dispute and when old negative entries will fall off.

Also, keep in mind that while negative entries aren’t always avoidable, they don’t mean you’ll have a low score forever. Positive entries on your report, like on-time payments, paid-down balances and a good mix of credit can, over time, outweigh negative marks.

6. What can I do to improve my credit score?

No matter what your score is, there are always ways you can improve it. Boosting your score can come with a myriad of benefits, and even if you’re in the 800+ range, it’s a good idea to review your credit report to see where you can improve.

There are a few main ways to improve your score for the long term: building up the positive history on your report by making payments on time and keeping your utilization ratio low. You can help diversify your credit mix by taking out a credit-builder loan, or by taking out a secured credit card.

One other way to boost your score is to dispute untrue or inaccurate entries on your credit report. False missed payments, old accounts that haven’t been reported as paid off or unauthorized inquiries are just a few examples of entries that pull your score down and can be disputed.

While disputing credit report information can be simple, leaning on professional help like credit repair company Lexington Law can help you track down false entries and quickly resolve them.

Lexington Law offers a team of licensed attorneys and experienced credit dispute legal professionals to comb through your report for false entries, work through the dispute process and clean up your credit report overall, potentially boosting your score as you continue to build up your history.

If you think your report could do with a close examination and refresh, consider contacting Lexington Law for a free credit assessment.

The bottom line

Asking yourself where you stand and where you can improve your credit score is an important part of your financial hygiene.

By staying on top of your credit score and taking steps to improve it, you can stick to your financial goals, make sure your debt and card usage aren’t getting out of hand and take advantage of the opportunities an excellent score can offer.