By Eva Norlyk Herriott
Credit scores have always been important, but today, more than ever, your credit scores rule your financial destiny. With tightened lending practices and stricter underwriting rules, paying attention to your credit score is no longer simply a choice, it’s a necessity. If your credit score is already high, follow basic rules of credit to keep it that way. If it has fallen below average, now is the time to take steps to increase your credit score.
Your credit score affects not just your ability to get approved for a mortgage, an auto loan or a new credit card. It also determines the loan terms and hence how high your monthly payments will be. In addition, credit scores often play an important role when you apply for a new job or seek to rent an apartment or house, as prospective employers or landlords often rely on a person’s credit report as part of their background check.
Fortunately, new online tools make it easier than ever to keep an eye on your credit report and even take steps to improve your credit score. Here is CreditCardGuide.com’s selection of the top 3 online credit management tools.
Tool #1: Get a Free Copy of Your Credit Report
By law, everyone in the U.S. is entitled to a free copy of their credit report once a year. AnnualCreditReport.com is the official site to go to download a free copy of your credit report from each of the three credit reporting agencies, Equifax, Experian, and TransUnion. At the site, you can download a copy of your credit report right away, or request a copy to be sent by phone or mail.
Be aware that all three credit bureaus do some heavy-duty upselling at the site, trying to sell you numerous additional services. Most people don’t need these extra services. If your credit report needs further monitoring or repair, there are usually better options. If you are curious about a service, sign up for the free trial period, but be sure to cancel before it expires.
Tool #2: Estimate Your Credit Score
Reviewing your credit report is a good place to start, but you also need to know what your credit score is. While credit reports can be downloaded for free once a year at AnnualCreditReport.com, the credit bureaus charge a fee of $9.95 or more for your credit score.
Instead, use a free online credit score estimator to estimate your credit score. Simply answer a number of questions, and the FICO Score Estimator will calculate a range within which your FICO score is likely to fall. In most cases, this will be enough to determine whether your credit score is okay or in need of attention.
Tool #3: Fix Credit Report Errors
One of the fastest and easiest ways to improve one’s credit score is to fix credit report errors. An estimated 75% of credit reports contain some type of error, and many of these negatively impact credit scores. Something as simple as a credit card company failing to update the credit limit on a credit card can pull the credit score down by making it look like the card holder is using more of his or her available credit than is actually the case.
A new website, SmartCredit.com, offers an easy way to both check your credit report for mistakes and correct mistakes quickly and easily online. SmartCredit.com offers several advantages over simple credit-monitoring websites. It highlights the negatives on the credit report and makes it easy to see how much a negative is pulling down the credit score.
Even better, SmartCredit.com makes fixing credit report errors an easy mouse click away. The site’s technology communicates electronically with a vast number of banks, credit card companies, and collectors and automatically routes corrections or complaints to the right place. This can save you a lot of time and confusion trying to find the right department and location of creditors and banks. The site also provides tools to request goodwill corrections of negatives (such as year-old entries that continue to mar a person’s credit) or debt settlements. The site automatically estimates how much your credit score is likely to improve based on those actions.
SmartCredit.com is a paid service, but the ease of resolving errors directly online instead of by snail mail makes a short-term subscription to the site well worth the cost—if your credit report contains errors. If it does not, you can always cancel within the five-day free trial.
