National Credit Education Month
Learn more about your credit this month.
Published Wednesday, March 2, 2022 to Articles
March is National Credit Education Month, so it's a great time to evaluate your credit score.
Your credit score is an easy way for a lender to evaluate how likely you are to pay back a loan. A higher credit score means that you have a good history of on-time payments, so lenders will be more likely to give you loans at better rates. A low enough credit score can stop you from getting a loan altogether, which may put a home or car beyond your reach. And nowadays, even some employers and landlords look at your credit score to see if they want to hire you or rent to you.
Your credit score can constantly change, so it’s important to remember that day-to-day choices can have a big impact. Some examples include:
- Applying for loans. You may be able to save 20% off your purchase today by opening a store credit card, but that will cause a "hard pull" of your credit. Too many hard pulls can lower your credit score, so a good rule is to limit them to three a year – and less is always better.
- Missing payments. Your payment history is the single biggest factor in your credit score, so being late even once can lower it dramatically. Late or missed payments can stay on your credit report for seven years, so always try to make at least the minimum payment on time.
- Receiving extra cash. If you get a tax refund or other bonus money, consider using some of it to pay down your debt. Having a better balance between your debt and your income can help increase your score.
- Opening and closing accounts. Lenders like to see accounts with long histories in good standing, so closing accounts can actually cause your score to drop.
What goes into your credit score?
♦ Payment history: 35%
♦ Available credit: 30%
♦ Length of credit history: 15%
♦ Credit mix: 10%
♦ Credit inquiries: 10%
To learn more about your credit score,
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It's up to you to protect your score. The best way to do so is to keep an eye on it. Check with your financial institution to see if they have a free credit monitoring tool like Veridian's Credit Central. Be sure the tool uses soft pulls, which don't affect your score, like Credit Central does.
You should also get your free credit reports from the three credit bureaus at annualcreditreport.com and review each for errors. If you find any, dispute them with each bureau whose report includes the error.
For more tips on how to save and budget your expenses or to talk about your individual financial situation, fill out the form below.