Checking your credit score linked to financial success
Knowing your credit score makes for better financial decisions.
Simply receiving a periodic email that makes you aware of changes to your credit score can prompt you to make better choices with your money. A new research paper based on 400,000 Sallie Mae student loan borrowers showed that simple act led to a nearly 5% decrease in past-due credit accounts and an increase in credit scores after one year.
Fewer overdue payments save you money on fees and interest charges, while a higher credit score provides an opportunity for you to save money on any future credit cards or loans you apply for.
“Our findings demonstrate how knowing and tracking your FICO Score can improve decision-making and overall financial health, analogous to how the use of a Fitbit can lead to improvements in one’s physical health,” said co-author Rourke O’Brien.
The research underscores the importance to consumers of learning how to responsibly manage their finances by accessing “the information and tools they need to understand what a FICO Score is, why it is important to know it and how maintaining a positive credit record affects many different aspects of their lives,” Sallie Mae senior vice president Kelly Christiano said.
Learn all about how credit scores work, what good credit scores are and what goes into calculating yours in our helpful guide to understanding your credit score. Then, once you’ve figured out the basics, check out some specific tips on how to repair or improve your credit score.
In related news, credit scores have risen in recent years to their highest nationwide average since 2012, but with credit card debt at a new record high, interest rates rising and lenders beginning to tighten credit lines, now is a great time to review where your credit score is at.
If you don’t have much of a credit history to start with, a few new credit cards aim to offer their services based on your credit potential instead of your FICO number.