“Monitoring your credit goes well beyond scanning a three-digit number,” says Jeanine Skowronski, credit card analyst at Bankrate.com.
“A good credit score will help you, among other things, qualify for the best rates on loans,” Skowronski says. To improve it, “Americans need to thoroughly review their credit reports for errors or signs of fraud. They also need to understand what factors, like missed payments or high debt-to-available credit ratios, are driving their credit score.”
Bankrate advises consumers to check their credit scores at least three times a year, a figure other financial experts generally support — and everyday Americans, too.
“I’ve become something of a credit experts over the years,” says Dan Nainan, a New York City actor and comedian. “My credit was horrible, but now my FICO score is over 800.” Nainan says he gets a free copy of his credit report from each of the three major credit reporting agencies — TransUnion, Experian and Equifax — asking for a copy once every four months from each firm consecutively. “That way, you can stay on top of your credit,” he says. “And technically, you can get a free report at any time just by saying that you were denied credit.”
But don’t focus too much on the actual credit score when your review a report. Instead, home in on the line-by-line personal financial information.
“The problem with the free reports is that you do not get a credit score,” says Danny Garcia, founder of the credit repair firm PayAfterDeletion.com. “What most consumers don’t know is that it is impossible to get your real credit score from any of the credit monitoring services, as none of these services provide a score that is actually used by the lender.”
It’s much more productive to focus on the data being reported, as it is the data that ultimately generate the score, Garcia says. “Also, the consumer should check to see what data is reporting and ensure that it is reporting 100 percent accurate. If even one item is inaccurate, the score can be affected by over 100 points.”
Perhaps the best advice is to target the behaviors that lead to bad credit and turn those behaviors into habits that lead to a higher credit score. “If you know you’ve abused your credit in the past — paid bills late, defaulted on debt, maxed out credit cards — you may be curious,” says Coleen Pantalone, a finance professor at Northeastern University. “In all likelihood, your credit score will be low, and any loans you are able to get will carry higher rates.” ”
“A better thing to do than checking the score is to begin working to restore your credit,” Pantalone says. “Budget. Don’t overspend. Pay bills on time.”