If you have some rough spots in your credit file, you already know how costly it can be. But many people think that as long as their financial history and current situation is solid, they don't need to be concerned about their credit score. In reality, this isn't true. No matter where you stand on the economic ladder, your credit score is something you need to pay attention to. There are several reasons for this:
1. There May Be Data Items You Can Improve On
No matter what financial shape you are in, you might be able to improve your credit score with just a little effort. While the vast majority of credit reports are accurate, the credit bureaus deal with billions of data points and mistakes sometimes happen.
And remember, the credit bureaus get their data from your creditors. If there is a mistake in your credit report, the chances are that a vendor made the error. They could report on an account that you actually don't own, charge-offs that never happened or late payments that were actually paid on time - to name a few. The only way the credit bureau will learn about these types of errors is if you bring it to their attention.
2. Points Accumulate
Creditors offer consumers credit rates based on their credit range. If you are smack dab in the middle of a given credit range, one or two points probably won't make much difference. So if you fix an error that adds only a few points, it's probably not going to result in a meaningful benefit. But if you are right on the edge of a better credit range and you discover an error that could add a few points to your score, those few extra points might just be enough to get you over the hump into that higher credit range. If that happens, you might find yourself in a much better position with more attractive rates.
By the way, you might end up in a lower range without having any errors or mistakes If you have too many score inquiries at the same time, have a maxed out card or carry small loans you could otherwise afford to pay off, you can put in a little effort to correct these issues and possibly pick up some credit points.
3. Your Credit Score Is Your Financial Calling Card
Like it or not, just about everybody reviews your credit report before deciding to do business with you or not and if so at what cost. That's right. Your report is used by would-be landlords, life insurance companies and potential business partners too. What this means is that even if you are a good financial shape, it's vital to have the cleanest credit report possible.
How To Make Sure You Have The Highest Score Possible
Fortunately, there are several steps you can take to maximize your credit score. Your first move of course is to review both your score and reports. Go through each of your reports and pinpoint those negative data points which can be removed. Keep in mind that a negative item must be removed from your credit report if it is inaccurate, unverifiable or incomplete. What that means is that you have a lot more targets to shoot for than you might think when you go hunting for ways to improve your credit score.
At the same time, keep your current credit in tip top shape by paying your bills on time, not opening new lines of credit unnecessarily and keeping your credit utilization low. That means, paying off debt if possible.
You deserve to have the highest credit score possible and it's important not to become complacent no matter what your financial situation is. While the creditors and credit bureaus try their hardest to keep your credit history accurate, it's up to you to make sure there are no mistakes in your files and to take every step you can to maximize credit points.