One of the most important numbers you need to be aware of is your credit score when it comes to your personal finances. This number will change, and it will profoundly impact your ability to get new credit. Additions to your credit report, even those made in error, could suddenly change your credit score. Accessing and looking over your credit report from time to time is essential. Doing so ensures that it is in good health and that you can get more credit if you should need it. So, it is crucial to know how to get your credit report for free.
Why Your Credit Report Matters
Your credit report reveals many things about your money management skills. Besides your personal information, it shows when you received new credit and what company gave it to you, how much credit you received, your current balance, and how timely you make payments on that account.
Your credit score will help to determine whether or not you will receive more credit or not. The lender will look at the information on the report and will use it to determine if you should get the loan. A low credit score (lower than 580) means that you will get smaller loans and a higher interest rate, along with a shorter time for repayment – which also means your payments are apt to be higher. Lenders give the best terms to people that have excellent credit scores (800 to 850).
What Potential Lenders Look for
When you apply for new credit, a potential lender will look at your credit report. Besides the actual credit score, the lender will consider the most critical factor on your credit report to be whether or not you usually make your payments on time. Payment history is the most significant factor (35%) used to figure your credit score.
The next thing that lenders will look at is your credit utilization. This number is based on how much credit you have compared to how much you have used. Lenders want to see this ratio lower than 30%.
Negative Information
A lender will also look for damaging information on your credit report. Companies can place this information on your report without your knowing it. Sometimes, they add it in error. The only way you can correct it is to get your credit report and examine it. It would be best if you did this yearly – and always before applying for new credit. When negative information is on your credit report, you need to address it and see if the company can remove it. Contact the company that placed it there and seek to get a solution.
Get a Report Before Getting New Credit
The best way to get good terms on new credit is to ensure that your credit report is in good shape first. The best way to do this is to make your payments on time, always pay the minimum amount, and reduce your debt to less than 30% of your income. A better credit score will not come overnight, and it will take some time to improve it, but it will be worth it to wait for bigger loans with better terms.
Get Your Credit Report for Free
The government says that everyone is entitled to get one credit report per year. You can do this from the big three credit bureaus: Experian, Equifax, and TransUnion. The single website where you can get your credit report or free once per year is AnnualCreditReport.com. This website will enable you to obtain credit reports from all three — you simply place a checkmark by which ones you want.