Why Do I Check My Credit Score?
I check my credit score because it's the most important gauge of my credit responsibility that lenders use to decide whether to lend to me and at what rate. My credit score impacts my insurance rates, and if I decide to work for someone else, it could impact my chances of getting a job.
My credit score is my financial reputation. I love the feeling of seeing my perfect credit score, or something close to it. It's a financial habit I have, and here is why you should do it too.
Your Credit Report Is More Likely to Have Errors Than You Think
We're responsible for building and protecting our credit scores. I have scheduled annual reminders in my calendar to go to annualcreditreport.com to check my credit report. I'm doing this next week even though we have zero debt. And here's why.
According to Consumer Reports, 44 percent of people who checked their credit reports found at least one error, and a past Federal Trade Commission study found that five percent of consumers had errors serious enough to result in worse borrowing terms.
Credit report errors can include:
Accounts that aren’t yours
Incorrect balances or credit limits
Payments marked late when they were on time
Old debts that should have aged off
Checking your credit score serves as a warning system for mistakes on your credit report. A sudden drop or unexplained change is usually your cue to review your full credit report and dispute mistakes before they cost you money.
Regular Monitoring Is Easier Than Ever
You’re entitled to one free credit report each year from each of the three major credit bureaus using annualcreditreport.com. (Don't use "freecreditreport.com"; it's not actually free through that site.)
Quarterly check-ins help you spot fraud or identity theft early. They also help ensure your credit report is accurate.
Automatic Payments Protect Your Score When Life Gets Busy
We own a Tesla (purchased before we knew that Elon was insane). The car can drive autonomously, but that doesn't mean we fall asleep at the wheel. We carry on with conversations or lose ourselves in the music, but we're aware enough to take the wheel if we need to.
Think of automatic payments in the same way. When life moves forward as usual, your accounts can stay protected from missed payments without you having to think about it. But you're still there, ready to take the wheel when bad things happen or your circumstances change, because one of the biggest factors in your credit score is making payments on time.
Related: How Your Credit Score is Calculated
Credit Utilization Matters More Than Most People Realize
A common rule of thumb says to keep your credit card balance below 30 percent of your credit limit. It's a myth, and it costs people a fortune. I discussed this nonsense on a past episode of The Modern Husbands Podcast with Rod Griffin, the Senior Director of Public Education and Advocacy for Experian.
To maximize your credit score, keeping utilization below 10 percent, and ideally close to zero, is far more effective. I credit this strategy with earning a perfect FICO 8 credit score.
Credit utilization is calculated using current reported balances. That means, when your credit report is run, the balances on your loans at that moment are what is calculated, even if you plan to pay off the full balance before the due date.
Checking your credit score helps you see utilization's impact in real time. With real-time information, you can make ongoing, regular payment decisions that improve your score. Of course, it's even easier to simply pay your credit card balances in full each day.
And no, carrying a balance on your credit card from one billing cycle to the next does not help build your credit.
Your Credit Score Affects More Than Just Loans
Credit scores aren’t just about borrowing money. They influence everyday costs in subtle ways.
Landlords use them to screen tenants. Insurance companies use them to price premiums in many states. Utility companies may require deposits. Even cell phone plans can be affected.
For parents, your credit habits can also shape your child’s financial future. Adding a child as an authorized user on a well-managed card can help them establish credit early, provided the account has low utilization and a perfect payment history. That makes your own credit behavior even more consequential.
A Good Credit Score Is Built Quietly and Lost Quickly
One mistake can undo years of responsible behavior. See for yourself with this FICO Credit Score Simulator.
People who achieve excellent or even perfect credit scores pay on time, keep balances low, avoid unnecessary applications, and monitor their credit regularly. They also catch problems early, before they become expensive.
Professional Support
I support couples who want to manage money and the home as a team. I am also available for group coaching events. And as you've read, I've earned a perfect FICO 8 credit score multiple times.
I'm the only Certified Financial Therapist™, Accredited Financial Counselor®, and Fair Play Facilitator®, empowering high-achieving couples with systems to manage money and the home as a team — drawn from decades of national leadership and lived experience.
Click here to learn more about how and when I can support you.
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