Regularly checking on your financial health is imperative to see where you, and your credit score stand. This is extremely important if you are planning to make any big purchases in the near future. Even if you aren’t planning to make any large purchases right now, it’s always good to have an idea of what your profile looks like. This includes what you can do to make it better, as well as to ensure that you haven’t been compromised. So here are some of the best ways to check on your credit and your financial health.
Annual Credit Report
The first step to checking on your financial health is to pull your free annual credit report. Most credit card companies will give you your credit score now, but they won’t give you your full credit report. It is important to pull this every year to make sure everything on it is accurate. Since the 3 largest credit reporting agencies rely on information to be reported to them, there is room for human error.
This is where you come to double-check that all of the information is correct. So when you pull your annual credit report, you will actually get 3 of them. Equifax, TransUnion, and Experian will all give you their version of your credit report.
I can tell you that I have always found discrepancies of some sort on at least one of the reports. So go through each one of them very carefully, since that is likely to happen to you at least once.
The main things you should be looking for on these reports are:
- maiden and married names
- current and past addresses
- amounts due to creditors
- the correct creditors
- listing is correct, such as “pays as agreed” or “late payments”
If you find incorrect information, you can submit a dispute and they will look into it.
While these reports won’t give you your credit score, it is easy enough to come by with Credit Sesame. I have this app on my phone so that I can check it once a month when the credit score is reconfigured. It has been great to watch our scores continue to climb with this app!
Not only does Credit Sesame give you your credit score, but it will also show you the things affecting your credit score in each category. This has been very helpful to us in the past when things popped up on our credit report that were incorrect. So if you haven’t checked out Credit Sesame yet, you really should.
As mentioned, when you pull the credit report you will see all of the creditors, past and present, that you’ve ever owed. It will also show whether or not you:
- paid as agreed
- are paying on time
- or are delinquent
I usually double-check this extra thoroughly since this can have a pretty big impact on your credit score and your financial health.
If you find yourself still owing creditors and not paying as agreed, then reaching out to each one to come up with repayment plan is in your best interest. Two of the best methods for debt repayment include debt snowball and the debt avalanche. I personally like the debt avalanche method, but that is probably because I’m a numbers person. The debt snowball method works better with people who are more visual and need to see some more immediate movement on the needle.
No matter what type of person you are, just make sure to choose the best method for you to be successful.No matter what type of person you are, just make sure to choose the best method for you to be successful. Click To Tweet
The next thing to check for your financial health is your credit cards. If you currently have credit card debt, then it would be best to stop using those cards until you can get the debt repaid. Otherwise you are just continuing to wrack up an enormous amount of interest fees. This will only make it take a lot longer to dig yourself out of the hole.
But don’t close the cards because that will affect your credit utilization ratio, which can lower your credit score. Just keep them open but put them in a drawer, safe, or freezer where you aren’t tempted to get them.
Instead of using credit cards, start using cash for everything instead. It is much harder to shell out cash for things than to just whip out a credit card. So spending cash only will make you pause a little bit longer to really think about the intended purchase.
The cash method is how we do things around here for almost everything. If we don’t have the cash on hand to spend, we can’t buy anything. It has really helped us become more cognizant of what we are spending and if the thing is really a need or a want.
After you see exactly how much debt you have, the next step is to create a budget. When you are doing this, you will first need to decide which method you plan to use to pay off your debt, if you have any. Any funds not allocated to needs should be thrown at the debt category until you can get rid of it all.
I always go with the most aggressive debt repayment plan I can just to get rid of it as fast as possible. Although, this usually means sacrificing a lot of the wants for a period of time. But in the end, it’s very much worth it to have the weight of the debt removed from your shoulders. And the discomfort is only temporary. So just keep telling yourself that while you are throwing everything you have at the debt to get rid of it.
The other thing you should be working on with your budget is building up your emergency fund. This is one of the most difficult things for most of us, because we could be using that money somewhere else more fun. But in the long run, the larger cushion you have the better your financial health. And, the more financial freedom you have to make choices that you might not otherwise have the opportunity to make.
Overall, knowing where you stand with your credit score is extremely important in this day and age. While your credit score may not be the end all be all, it is a good indicator of your financial health. So, make sure to pull your annual credit report to double-check everything that is on there for accuracy. Then work on paying off your debt as fast as possible, and increasing your assets, which includes your emergency fund.
As a side note, one of the best apps to continually monitor all of your accounts, and your progress, is Personal Capital. We love this app and use it weekly when we do our budget meetings. There are so many resources out there now to help ensure that our financial health is on track, so use as many as you need to.
What are some of your favorite ways to regularly check your financial health?