What Is A Credit Score and Who Uses It?
A credit score is a numerical representation of your creditworthiness, based on your credit history and current credit behavior, typically ranging from 300 to 850. Lenders use it to assess the risk of lending you money, with higher scores indicating lower risk and better chances of securing loans or credit at favorable terms.
Check Your Credit Report
Checking your credit report will always be the first step in your financial wellness journey. It’s the most important step because it allows you to assess whether your credit mix—such as a balance of credit cards, installment loans, and mortgages—is diverse enough to positively impact your score. Regularly reviewing your report ensures you're effectively managing all aspects of your credit, helping you stay on track for better financial health and improved creditworthiness. To make the process easier, try using a highlighter to mark any debts that need attention, and write down your debts from lowest to highest expense to create a clear repayment strategy.
Know Your Federal Law Rights
Federal law allows you to get a free copy of your credit report every 12 months from each of the three major credit reporting companies—Equifax, Experian, and TransUnion—through AnnualCreditReport.com. Free weekly online credit reports are also available from these companies, so take advantage of this service and ensure the information on all of your reports is correct and up to date.
Review & Dispute Credit Report Errors
Reviewing and disputing any errors on your credit report for each of the credit reporting companies—Equifax, Experian, and TransUnion—is important because inaccuracies can negatively affect your credit score, leading to higher interest rates or even loan denials. Addressing these errors ensures that your credit report is accurate, up-to-date, and truly reflects your financial behavior, helping you maintain or improve your creditworthiness.
Three Ways to Dispute Credit Report Errors:
01
Online
Visit the website of each credit reporting company (Equifax, Experian, or TransUnion) and use their online dispute tool to file a claim. This is the quickest and easiest method, and they typically respond within 30 days. (You can use the links below to fill out TransUnion and Experian's online dispute form).
02
Phone
Contact the credit bureau’s customer service directly to dispute an item on your report. This method may be less reliable than filing online, but it’s an option if you prefer speaking with someone.
03
Write a formal letter to the credit reporting company, detailing the error, and include supporting documentation (such as bank statements, receipts, or letters from creditors). Be sure to send the letter via certified mail to have proof of your dispute.
Additional Information About Disputing with the Three Credit Bureaus
01
TransUnion
Transunion’s dispute process by mail and dispute form
Mail the form with your letter to:
TransUnion LLC
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
03
Experian
Experian’s dispute process
and dispute form
Mail the form with your letter to:
Experian
P.O. Box 4500
Allen, TX 75013
Should I Consolidate My Debt?
Consolidating debt, such as student loans and credit card payments, can simplify your finances, potentially lower your interest rates, and help improve your credit score by reducing your overall debt-to-income ratio.
7 Consolidation
Mistakes To Avoid
#1 Avoiding Consolidation Scams – Be cautious of companies that claim to help you settle your debt for less. Always go directly to the source when considering consolidation for example, apply for a credit card with a hight limit that offers a balance transfer, allowing you to consolidate your credit cards without third-party fees or services. Additionally, always ask your creditors for a payment plan or hardship program, as they may offer more manageable terms directly.
#2 Not Working on Your Credit First – Failing to improve your credit score before consolidating may result in higher rates.
#3 Not Considering All Your Options – Overlooking other debt repayment strategies can limit your potential savings and flexibility.
#4 Going Deeper Into Debt – Consolidating without a plan can lead to continued borrowing, worsening your financial situation.
#5 Taking on a Higher Interest Rate – Consolidating with a higher interest rate than existing debts can increase your financial burden.
#6 Taking the Longest Term Available – Opting for the longest repayment term can lower monthly payments, but may end up costing more in the long run.
#7 Not Addressing the Root Cause of Your Debt – Failing to address why you accumulated debt in the first place can result in falling back into the same financial patterns.
Did You Know?
Correcting a misspelled name or removing an outdated or incorrect address on your credit report may not directly boost your credit score, but it can help ensure your credit report is accurate and up-to-date. While these corrections don’t impact your credit score on their own, resolving discrepancies or errors can prevent potential issues, like identity confusion or fraud, which could indirectly protect or improve your credit standing over time.