How to Learn and Track Your Credit Score
A credit score is a helpful number that grants you a better understanding of how likely you are to be approved for a loan or credit card. It can also be a determining factor in the interest rate you are charged for any loan or credit card you apply for.
How to find out your credit score
Your credit score measures your creditworthiness in the eyes of lenders. The higher your score, the better chance you have of getting various types of credit: good loan rates, high credit limits, desirable credit cards, and other quality financial products.
You can find out your credit score through a few different sources:
Credit card companies
Many major credit card issuers offer free credit scores. Customers often have to sign up for digital banking or log into their accounts to access them.
Most banks will provide customers with a copy of their credit score upon request or when they sign up for digital banking.
Many lenders provide borrowers with a copy of their credit score as part of the loan application process.
The three main credit bureaus (Equifax, TransUnion, and Experian) collect data on consumers’ borrowing habits and create their own versions of a consumer’s credit score. It’s important to note that each bureau may have different information on one’s record, so it is wise to check your credit report with all three bureaus, if possible.
Whether you live in an equitable distribution state or a community property state, you may still owe joint debt with your former spouse after your divorce proceedings. Read your final divorce decree carefully, and make sure you understand all divorce terms.
How to interpret your credit score
Credit scores are typically interpreted using the following categories, which can vary slightly depending on the bureau or reporting agency:
- Poor (300-579): A consumer with a score in this range is considered a high risk for lenders and most types of loans.
- Fair (580-669): People in this category are still considered relatively high risk, though some borrowers may qualify for certain loans.
- Good (670-739): This is considered a safe score range. Consumers with good credit scores are more likely to get approved for most types of loans.
- Very Good (740-799): This is considered an excellent range with few risks for lenders. Borrowers in this range often receive the best rates and terms from lenders.
- Exceptional (800+): Unless you are applying for very high amounts or risky loans, such as those with subprime interest rates or questionable terms, being in this category should guarantee you access to the best loan options available.
High credit card debt, frequent credit utilization, and late payments can lower your credit score. If you’re trying to improve your score, focus on debt repayment, and close any joint credit card accounts shared with your ex-spouse as soon as you can.
How to monitor your credit score
Monitoring your credit score is a great way to keep tabs on your financial health. Doing so can help you spot potential problems or discrepancies and ensure any errors on your report are cleared up quickly. Plus, regular monitoring will allow you to stay updated on changes in the marketplace and take advantage of any offers that could benefit you.
As a borrower, regular monitoring also helps you better understand how lenders evaluate borrowers. This can help guide you toward smart decisions when it comes to taking out loans and applying for other forms of credit.
In the long run, having a good understanding of your credit score can lead to improved creditworthiness (better loan rates) and access to quality financial products.
Monitoring your credit leading up to, during, and after divorce is important. You want to know what loans you may qualify for and make sure your ex-spouse hasn't taken out any loans or credit cards in your name that you would be responsible for repaying. At Hello Divorce, we care about your entire divorce process: before, during, and after. To learn more about what we offer, schedule a free 15-minute phone consultation.
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