Everyone knows that keeping your credit score healthy is critical to maintaining and improving your finances. But your credit score can impact you in ways that go beyond strict money matters in ways you never thought of. If left unattended, a bad credit rating can have a devastating effect on all parts of your life.
Typically we think about our credit score when we are thinking of borrowing money – when buying a house or a new car, or when refinancing a mortgage. Lenders aren't the only ones who look at your score, however. Increasingly, insurance companies and even prospective employers examine your credit habits as a way to evaluate your behavior, financial and otherwise. A poor credit rating can lead to you being denied coverage, paying higher premiums or interest rates, or even worse – not getting that new job!
Your credit history has been tracked and scored, based on complicated formulas that are not made public, by the three major credit bureaus – Experian, Transunion and Equifax – for as long as you've been borrowing money or using a credit card. You can't erase any problematic financial history, but there are several things that you can do now to repair or improve your credit score.
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Know your score. You can order a free copy of your credit report by at annualcreditreport.com or myfico.com. Verify the information the ratings agencies have and correct anything that is inaccurate by sending a registered letter explaining the error to the agency in question. (You may also want to write to the creditor that created the error and ask that they rectify their mistake.)