Manage and Monitor Your Credit

There’s no single definition of a “good” credit score. Your credit score might be sufficient for one lender but not another. A good credit score is the one that puts you in a position to get the credit you need. Once you achieve a good credit score, you’ll need to maintain it by managing your credit. Pay your bills on time, open only credit accounts that you need, and keep your balances low.

It is possible to get a loan or credit card even if your credit score is low. However, you may be charged a higher interest rate or have a lower credit limit. In some cases, you may also need to link the credit card to a savings account or provide a deposit. Try to avoid credit cards or loans with extremely high interest rates as that makes it harder to pay down the balance.

Your credit score is affected if a lender checks your credit score when you apply for a loan or credit card. This is called a “hard inquiry,” and it stays on your credit report for up to two years. However, a “soft inquiry” is when you check your own credit score — or it’s checked as part of a background check or by a financial institution to offer you a pre-approved credit card or loan. These soft inquiries don’t impact your credit score.

Credit scores can change daily as additional information is reflected on your credit report. Changes are based on updates to your account balances due to payments or new charges, new hard inquiries, or other account status changes. By closely monitoring your credit score, you’ll see when it changes and be able to take actions to improve it, if needed.

Your consistent, on-time rent payments can be taken into consideration along with your credit history to help determine if you qualify for a home loan. Learn more about how you can make your rent count.

You can dispute any incorrect or inaccurate information with the credit reporting bureau that issued the credit report. It’s a good idea to request a free annual credit report from each of the three reporting bureaus and check it carefully for any errors. If you request a report from a different bureau every few months, you can track your score throughout the year. Careful monitoring is the key to keeping your credit reports up to date and accurate.

Most delinquencies will be removed from your credit reports after seven years, except for bankruptcy, which may remain on your reports for 10 years. When rebuilding credit after having bad debts, be sure to monitor your credit reports and file a dispute with the reporting bureaus if the bad debts aren’t removed as they should be. And as always, if you can, pay your bills on time. A consistent history of on-time payments can help you recover faster, before the end of seven years.

It is better for your credit if you make small purchases on a regular basis on all cards, and then pay off the balance in full. If you keep the balances at zero without making purchases, you are not adding to your payment history.