Checking Your Credit Score? Don‘t Make These 8 Mistakes

As a technology geek and data analyst, I regularly analyze all kinds of data, including my own credit scores. Monitoring your credit is hugely important, but many people make critical mistakes that harm their scores. In this detailed guide, I‘ll explain how credit scores work, recommend the best free tools to check your credit, and share 8 common blunders to avoid based on my own geeky expertise.

What Exactly is a Credit Score?

Your credit score is like your financial report card, a number ranging from 300 to 850 calculated based on your credit history and activity. Lenders use it to determine your credit risk level – the higher your scores, the better deals and rates you can get.

There are two main credit scoring models:

• FICO® Score (300-850): Created by Fair Isaac Corporation, used in over 90% of lending decisions.
• VantageScore® (300-850): Jointly developed by the three major credit bureaus.

Both analyze five core factors to determine your scores:

As you can see, payment history and credit utilization are most critical. Now let‘s explore some common mistakes to avoid with your credit.

Mistake #1: Not Checking Your Scores Regularly

Shockingly, a 2021 Consumer Federation of America report found 26% of adults have never checked their credit scores! This can be disastrous – if you don‘t check, you won‘t know your scores are dropping until you get rejected for a loan.

I advise checking your scores every 1-2 months using a free monitoring tool (more on the best options later). This way you can catch any suspicious activity right away.

Mistake #2: Maxing Out Credit Limits

Credit utilization (the percentage of your limits you‘re using) should be kept below 30%. Maxing out your cards can create a credit score "double whammy":

• High utilization signals risk, lowering your scores
• And lowers your available credit, which also reduces scores

Aim to use less than 10-15% of your total limits monthly.

Mistake #3: Closing Old Credit Accounts

While closing unused cards may seem wise, it can damage your credit mix and history length, which are both important scoring factors.

Unless an annual fee applies, it‘s often best to keep old accounts open. Just use them periodically to avoid inactivity closure.

Mistake #4: Applying for New Credit Too Often

Every credit application causes a hard inquiry on your credit report. Too many hard inquiries in a short period signal risk and can reduce your scores.

Aim to space out credit applications by 6-12 months to minimize the impact. And only apply for accounts you truly need and plan to use responsibly.

Mistake #5: Paying Bills Late

Payment history is the #1 factor in your scores, making up 35% of your FICO® Score. Just one 30-day late payment can knock up to 110 points off your scores!

Set up automatic payments on all bills to avoid ever paying late. Review statements monthly to ensure no payment issues or errors.

Mistake #6: Not Checking Your Credit Reports

You should verify your Equifax, Experian and TransUnion credit reports annually for free at AnnualCreditReport.com. Shockingly, a 2021 Consumer Reports survey found 34% of U.S. adults have never checked their reports!

Review all account details, personal info, inquiries and account statuses. Dispute any errors with the bureaus ASAP to correct your reports.

Mistake #7: Closing Your Oldest Credit Card

The length of your credit history accounts for 15% of your FICO® Score. Closing your oldest card can slash your credit history length, so avoid doing so.

If it has an annual fee, ask the issuer to product change you to a no annual fee card instead of closing the account.

Mistake #8: Co-Signing Loans for Others

While well-intentioned, co-signing a loan makes you equally responsible for repayment. If the primary borrower misses payments, it damages your credit too.

I recommend only co-signing in absolute emergencies on a small loan amount for a short term. Otherwise, refer them to other options like a credit builder loan.

The Best Free Tools to Check Your Credit Scores

Now let‘s explore the top free tools I personally use and recommend to monitor credit:

1. Experian (Experian.com)

• Scores: FICO® Scores

• Reports: Experian only

• Updates: Scores monthly

• Best Feature: Cross-bureau fraud alerts

2. Credit Karma (CreditKarma.com)

• Scores: VantageScores from Equifax and TransUnion

• Reports: Equifax and TransUnion

• Updates: Scores weekly

• Best Feature: Credit utilization and score factors analysis

3. Credit Sesame (CreditSesame.com)

• Scores: VantageScore from TransUnion

• Reports: TransUnion

• Updates: Scores monthly

• Best Feature: Identity theft protection and insurance

4. Chase Credit Journey (Chase.com)

• Scores: TransUnion VantageScores

• Reports: TransUnion

• Updates: Scores weekly

• Best Feature: Dark web monitoring

5. Citi Credit Score (Citibank.com)

• Scores: FICO® Bankcard Scores

• Reports: None

• Updates: Scores monthly

• Best Feature: Customized credit tips

6. Capital One CreditWise (CapitalOne.com)

• Scores: TransUnion VantageScores

• Reports: TransUnion

• Updates: Scores unlimited

• Best Feature: Credit simulator tool

I recommend checking your scores on tools that provide both VantageScore and FICO® Scores for a complete picture. And verify your full reports quarterly.

Take Control of Your Credit Scores

As you can see, monitoring your credit doesn‘t have to be complicated. Avoid common mistakes, leverage the best free tools, and take proactive steps to build your scores. Your strong credit will serve you well when securing loans, credit cards, mortgages and more in the future.

On a personal note, I obsessively tracked my credit data to increase my own scores from 680 to over 760 in under a year. The journey wasn‘t easy, but the rewards have been fantastic. My credit cards now have ultra-low rates, and I qualified for a top-tier mortgage as well.

If I can boost my credit scores, you certainly can too. Stay vigilant, be patient and let me know if you have any other questions!