Why Check Your Credit Score?

By: Dr. Sharice Bradford, Director of Development – Chicago Treasurer’s Office

Credit report with score on a desk

Checking your credit score is comparable to taking the pulse of your financial health. It’s not just a number; it’s a barometer of your financial standing and potential. Understanding why it’s essential to monitor this numerical reflection of your financial habits can significantly impact your financial well-being.  For your finances, it is just as important as getting a health check-up. 

Primarily, staying vigilant about your credit score offers insight into your financial behavior and the health of your creditworthiness. It showcases how responsible you are in managing borrowed money, impacting your ability to secure loans, mortgages, or credit cards. Lenders rely on these scores to assess risk; a healthy score opens doors to favorable interest rates and higher credit limits.

Routinely checking your credit score allows you to catch inaccuracies or potentially fraudulent activities early. Errors on your report could negatively impact your score and, subsequently, your financial opportunities. Correcting inaccuracies promptly safeguards your financial reputation and ensures fair assessments by lenders.

Life events and decisions affect credit scores. Applying for new credit, late payments, or closing accounts all have consequences. Knowing how these actions impact your credit score allows you to make informed financial decisions. For instance, understanding the effect of closing a credit card on your score might influence your choice to close the card or keep it open.

Regularly checking your credit score can also provide motivation to maintain healthy financial habits. Witnessing improvement due to disciplined financial behavior reinforces positive actions, fostering better money management practices.

References from financial institutions like Experian, Equifax, and TransUnion underline the significance of monitoring your credit score. These entities emphasize the importance of knowing your score, understanding its components, and regularly reviewing credit reports for accuracy.

Notably, resources from financial advisors and government institutions like the Consumer Financial Protection Bureau advocate for regular credit score checks. Their guidance stresses the impact of credit scores on various aspects of life, from securing loans to renting apartments.

Checking your credit score isn’t just a task; it’s a financial responsibility. It empowers you with knowledge, allowing you to make informed decisions, safeguard your financial reputation, and work towards achieving a healthy credit standing. With resources and institutions stressing its importance, regular monitoring of your credit score emerges as a fundamental aspect of maintaining financial stability in today’s world.