You should pull your credit report at least once a year if not every four months, but once you get that report, what do you do with it?
Here are some things that you should look at once you pull your report that may be affecting your score:
Late Payments
Delinquencies are big influences on the credit score, says Stephen, they make up 35 percent of your overall score.
If you see notations that bills have been paid 30, 60, and 90 or 120 days late, this is very damaging to your credit.
The other factor is how late the payment was, and how long ago was it.
The later the payment, and how recent, will determine to what extent it hurts your credit. The more time that has passed since you made a late payment, the less it will affect your credit..
High Debt-to-credit Limit Ratios
Debt-to-credit ratio will also be a factor in your credit score for example:
- if you have a credit card with a $1,000 balance and a $5,000 credit limit, this ratio would be 20 percent.
- Scoring formulas also look at your debt-to-credit limit ratio a second way: calculating the total of all your debts on revolving accounts against your total credit lines on those same accounts.
So if you have four credit cards each with a $5,000 credit line ($20,000 in credit), and you have a $1,000 balance on two of them and nothing on the other two ($2,000 in debt), this ratio would be 10 percent.
Although there is no magic number we typically see that 10 percent of your overall debt is a good number to go by.
Collection Activity
Most of the time, if you have an account that has gone to collections or been written off as a bad debt, you know about it, but not always.
There are times when you move and the utility companies can’t find you to send the final bills so they end up going to collections without you knowing it or it may not be yours but the last tenant.
If you find an item that isn’t yours, you can dispute it and have it removed from your report.
If the item is yours, you have some decisions to make, can you afford to pay it?
It’s a good idea to check the time that has passed, the item can stay on your credit report for seven years. The longer it’s been on your report, the less it affects your score.
Judgments, Liens, Bankruptcies
If you’ve had any major financial difficulties that involved judgments, liens or bankruptcies hopefully you will know. If by chance someone has taken over your financial identity, a notation on your credit report could be your first clue.
Also a debt collector has tagged you with someone else’s debt or taken action against you without proper notification this can also cause a nightmare for you.
When you get that report, scan the “public records”.
Active Accounts You Closed — Or Never opened
If you have closed an account make sure that is states it is closed and that the dates are correct. If some reason they say open, then contact the issuer and ask them to ensure to contact the credit bureau and fix it.
Hard Inquiries
Your credit report will tell you who else has been viewing your credit report. Called “inquiries” in credit-speak, they come in two kinds.
Hard inquiries are when you have actually requested new credit — filled out an application, signed paperwork, etc. — and asked a lender to check your history. When you get a hard inquiry, your credit can take a small dip. Hard inquires could affect your score for one year, but you’ll see them on your report for two years.
Soft inquiries are what credit bureaus put on your report when someone reviews your credit file but you haven’t asked for new credit. If you pull your own credit report, that’s a soft inquiry. You’ll also see one if a prospective lender pulls your credit for marketing purposes. Soft inquiries don’t affect your score. Inquiries are respectively such a small portion of your score but are very useful to see who is using or requesting your information.