*This post may contain affiliate links
Unless you’re filthy rich and can pay cash for all of your belongings, chances are you will need to borrow money from a lender aka get a loan. Your credit score will probably be the most important 3-digit number in your life. It not only shows lenders your likeliness of repaying debt, your credit score also determines the amount of your loan and interest rate.
Those with bad credit typically receive high interest rates on their loans which can be the death of your finances. You can wind up paying more in interest alone than the original amount you borrowed, and monthly payments are often sky high as well. I once had a car loan with an interest rate of over 9% due to not having much credit, and although I was giving up my whole paycheck the balance hardly moved! It’s important to understand that loan payments are applied to interest first and then to your principal balance (the amount you probably thought you were signing up for).
Take it from me, a high interest rate due to not-so-hot credit is not so hot. Once I started tracking my credit score I was able to increase it by 100 points in just one year.
I’ll never get a loan so why does my credit score matter?
A credit score is important for not only loans but a number of other reasons as well. You may be able to get a better rate on home and auto insurance or be saved from paying a hefty security deposit for an apartment. Certain phone plans may use your credit score to approve you, and it may even come in handy when you’re applying for new jobs!
Why Credit Sesame?
Credit Sesame allows you to monitor your credit while receiving tips and resources to help improve your overall credit health for the price of absolutely nothing. Nada. Free.99.
What’s the catch?
There isn’t one! Enjoy your credit score, credit monitoring, identity theft protection, and saving recommendations all for free.
Related reading: Pay Off Your Debt with a Credit Card?
Does it help me improve my score?
Your credit health is made up of a number of different components. This includes your credit usage (how much of your available credit you’re using), the number of credit inquiries on your report, credit age (how long an account has been open), payment history, and so on.
Once you have a basic understanding of what makes up your credit score and the effects your report has on those three golden numbers you can then establish a plan to improve it.
Confused already? I was too and I still am sometimes, but Credit Sesame makes it easy since they do all of the hard stuff for you.
Credit score analysis
On your account, your credit score is analyzed for you. This analysis includes the different components mentioned above such as your payment history.
With this feature, all of your debts are broken down into different categories depending upon its type. For example, below you see that I have credit card debt, an auto loan, and student loans. If you have never totaled up all of your balances before you may have a mini heart attack but that’s OK! Breathe. You’re now taking charge and I promise there’s nothing more satisfying than watching the balances dwindle and your score rise.
If you’re looking to get a loan or another credit card this feature gives you your approval odds before you actually go out and apply. Knowing your chances of approval can limit the number of inquiries on your report thus reducing the risk of your credit score dropping.
When you’ve been working your tail off to get or maintain a satisfactory credit score, as well as knocking out your account balances, the last thing you want is for someone to acquire debt/credit under your information. With identity protection, your inquiries and accounts are continuously monitored for unusual activity that could point to identity theft.
This feature is my favorite. With Credit Sesame, you’re able to enter in your financial goals and get advice to help achieve them. I made purchasing a home one of my goals, and as you can see it gives me information such as how to select the right mortgage as well as helpful articles (not pictured).
Additional tips for improving your credit score
Pay off credit card balances before your statement cut-off date
If you are someone that leaves an account balance on your credit card statement then you are a bank’s best friend. Why? They get to charge interest on the amount you left behind thus making a profit off of you. It’s extremely important to pay off your balances before your statement cut-off date because it saves you money and increases your credit score.
To find your cut-off date, look at your statements to find the billing period. Your statement should have a specific day of each month which will mark when your balance is actually sent out to creditors.
Make payments on time
As mentioned above, your payment history is an important component of your credit score. This is tip is a no-brainer.
Credit is undoubtedly confusing, especially when you don’t have all of the right resources to help guide you along, but it’s important to understand how it works. Track your credit score for free and receive helpful tips and resources with Credit Sesame.