When Should I First Check My Credit Report?

Published on Jun 17, 2015 07:11 am

Congratulations! If you’re beginning to ask about your credit report or your credit scores, it might mean that:

a. You were taught early on about the importance of managing your personal finances and are eager to test the waters on your own, or:

b. You’re starting to receive credit card offers and are curious about how the process works.

Either way, you’re moving in the right direction.

Financial literacy is valuable knowledge, and everyone should be taught how to manage money and use credit responsibly at an early age. Learning the ways to be smart with your funds early means that using good judgment comes naturally once you have money of your own. You can first begin to establish credit at age 18. You may ask, “If I’m just turning 18 and don’t have any credit yet, should I check my credit report?”

The answer: your credit report shouldn’t show anything at that point. However, if your information has been used in the past by an identity thief, there may be a trail of old information to correct first. According to the Federal Trade Commission, identity theft is the fastest-growing crime in America, and one that can befall adults and children alike. As you start your credit journey, it’s important to confirm that your credit profile is truly the blank slate it should be.

As a newcomer to the world of credit, it’s important to have a basic idea of how credit scoring works. You have many credit scores and each score is determined by a different scoring model, but if you understand the following five categories, you’ll have an idea of some of the most important factors across many scoring models. Your FICO® Score powered by Experian, for instance, is affected by five factors:

  • Payment history – This tells lenders whether you pay your bills on time.
  • Credit utilization ratio – This is defined as how much credit are you using in relation to your total amount of available credit. This signals whether you have a high dependency on credit. A general rule of thumb is to try to keep your credit utilization ratio below 30 percent.
  • Length of credit history – This shows lenders how long you’ve been handling credit responsibly.
  • Credit mix – This shows lenders if you’ve been responsible with a variety of credit types.
  • New credit – This indicates to lenders if you are actively searching for credit.

This may seem like a lot to remember just as you‘re starting out, but remember that good credit behaviors – like paying all of your bills on time, keeping credit card balances low, and only applying for credit as you need it – can help you avoid early missteps and put you on the right track from the start.

About the Author
Ash Cash is a business consultant, motivational speaker, financial expert and the author of “Mind Right, Money Right: 10 Laws of Financial Freedom,” and “What the FICO: 12 Steps to Repairing Your Credit.”

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of free.

Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2015 ConsumerInfo.com, Inc. All rights reserved. FICO is the registered trademark of Fair Isaac Corporation.

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