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Knowing your credit score leads to higher credit scores!

"Knowledge is power." This famous quote, typically attributed to Sir Francis Bacon in 1597, surely wasn't referring to credit scores but, according to a new study, knowledge of your credit score does give you the power to manage credit responsibly.

Researchers from the University of Wisconsin, New York University, and the University of Chicago studied over 400,000 consumers of private student loans from June 2015 to June 2017. Sallie Mae offered free access to FICO scores over this period, but some consumers also received quarterly e-mail updates on their score and the underlying factors and calculations.

When e-mail updates were provided, consumers were 65% more likely to view their credit scores. Those who viewed their credit scores were significantly more likely to increase their scores and less likely to have accounts with missed payments.

Why would knowing your credit score help you improve it? The study's authors suggest that a credit score makes an excellent yardstick for setting goals and measuring your progress one author drew the analogy of a Fitbit for your credit. If your goal is to handle credit more responsibly, you can quickly understand your progress when feedback is condensed to a simple number.

The study also verifies the importance of regular reminders. Many credit card issuers realize this and include free credit scores with their statements or free online access to scores. If your card issuer doesn't provide a credit score, there are multiple ways to access your score and you have many ways to set alerts or reminders to give your credit score a regular review. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.

Are you ready to improve your credit score by checking it regularly? Start by understanding the five main factors that affect your credit score.

1. On-Time Payments Regular on-time payments shows responsibility that gives creditors confidence. "Your score is emblematic of how you demonstrate your ability to handle credit," says CO-OP Financial Services Industry Fraud Specialist John Buzzard. "Always pay on time."

2. Credit Utilization If you're maxing out your cards, creditors are wary of giving you more credit. Stay below 30% of your credit limit. "Be careful to not have too much credit on the credit accounts that you do have," advises Buzzard. For the best scores, aim for 10% or less.

3. Age of Accounts Older accounts in good standing show long-term responsible behavior.

4. New Credit Too many requests in a short time makes creditors think you're overextending yourself. "Whenever you apply for new loans, including refinancing, creditors will always request a copy of your credit report, which leads to new hard inquiries," explains Steve Millstein, a Credit Repair Consultant for Credit Repair Expert. "Hard inquiries generally lower your credit score by a few points."

5. Credit Mix A portion of your score is based on the mix of credit you have revolving credit card accounts, mortgages, auto loans, etc.. Your credit score is higher if you show that you can handle different types of credit responsibly.

While checking your credit score regularly is an excellent idea, it's even more important to check your credit reports from each of the three major credit reporting agencies Experian, Equifax and TransUnion. Your credit score is calculated from all of the information included in your credit report. Without looking at your credit report, you may not know why your credit score changed.

If you see an unexpected drop in your credit score, check your credit report for any signs of fraud or accounts in your name that you didn't open. You may be a victim of identity theft. If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, join MoneyTips.

You have opportunities to check your credit score, as well as your credit report, periodically. Why not take advantage of them? rease your knowledge as well as your powers of fiscal responsibility.

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