In a race, the competitors start at the starting line. They line up and go, and everyone runs along the same course toward the same finish line. But what if the runners didn’t know where the starting line was? And what if they had different signs telling them where to go? You wouldn’t have a race; you would have chaos.
There is an almost overwhelming amount of information out there about credit. So one way to help simplify and streamline the information that you need to know is to think of it like a marathon — a credit marathon. Each one of us is running a type of race with our credit. Here’s what the race looks like and how you can win your event.
The Finish Line
The finish line is a definite goal that is specific to your credit score. Perhaps you want to have a credit score that will enable you to qualify for a mortgage. Or maybe you’d like the peace of mind that comes with a high score, knowing that you can get access to lower interest loans if you need them. The best way to run this race and win it is to write down your goal and keep it at the top of your mind.
- Do you know what your credit goal is?
- Have you written it down to remind yourself of it regularly?
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The starting line is the place where you begin — it’s the credit score you have now. Knowing what your existing score is reveals exactly where you are starting in the “credit race.” In order to know where to start, you need to know what your credit score is. And I’m not just talking about knowing your credit score from last year or the last time you applied for a loan. The race starts now, so you need to know your current credit score. You can opt for a service like Credit.com’s Credit Report Card, which offers you a free credit score once a month.
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A starting line and a finish line are good but it’s only a race if you have a course to run. This is where your credit report comes in handy. Each of the three nationwide credit reporting agencies — Experian, Equifax, and TransUnion — gather your information into a credit report that reports on your credit history, the amount of credit you have, the types of credit you have, and much more. By using your credit reports, you can identify the opportunities where you can make improvements (for example, by building good credit habits, correcting errors on your report, paying off a long-forgotten debt, scheduling your payments if you have a tendency to pay late). AnnualCreditReport.com gives you access to your credit report for free from each major bureau once a year. That’s a good place to start.
- Have you looked at your most recent credit reports from each of the three main credit reporting agencies?
- Have you reviewed each report to outline the opportunities to make positive credit changes in your life?
We are each running a credit race — but it takes dedication, and while the results may not happen overnight, it’s worth it to be in it for the long haul. Those who are more likely to win this race are the ones who know their starting line, the finish line, and the path to get from one to the other.