Dealing With Credit Bureaus

The best way to get and keep a good credit score is to earn a steady income, borrow some—but not too much—and pay all of your bills on time. And don’t get sued by anybody. And do all this consistently, over your whole adult life.

Not everyone manages the credit equation perfectly. In fact, most people have problems with some part of it at some point. If you’re one of those many, you’ll need to manage your credit score—especially if you want to buy or refinance a house, get a new car or start a business.

Credit scores are designed to be hard to change, though. They are part of a decentralized system: one group of companies keeps your financial data, another group analyzes it and a third uses the analysis to make lending decisions.

The best way to improve your credit score is to know and manage your financial data, which is kept by credit bureaus. (These companies are more formally called “consumer reporting agencies” or CRAs.)

Financial counsellors usually recommend getting a credit report from each credit bureau three to six months before you apply for a home loan, buy a car or attempt to borrow a large sum of money for any other reason. Even if you aren’t planning a major purchase, most experts suggest that you check your credit reports once a year.

You should check them more frequently if you’re cleaning up your credit history, or if you’ve been a victim of fraud or identity theft.

Next: How to Get Your Reports