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Have you ever heard of something called a “credit card?”  What about a “mortgage?”  No?  Really?  How are you getting the internet in your hole in the ground?


I’ve noticed that a credit score is the one thing that will cause more panic than a roomful of African Killer Bees; don’t ask me how I know, it was back in college.  Your credit score is only a number.  No, not really.  Your credit score is a reflection of your financial history.  To credit card companies and banks giving out loans, you are an investment.  They will let you use money right now, if you pay it back and then some (interest) later.  Before they let you use their money, these companies are going to check to see if you are a good bet; that’s where they look to your credit score.


The Federal Trade Commission says:


A credit score is a complex mathematical model that evaluates many types of information in a credit file. credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service –– specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.











Where to get your Credit Report & Credit Score


By law (the FACT Act), everyone is entitled to receive a free copy of their credit report from each of the three nationwide consumer credit reporting agencies (Equifax, Experian, & TransUnion) every 12 months.  You’ve seen the commericals with the catchy tunes, “Free credit report dot com, tell you friends, tell your dog, tell your mom.”  I think they’re catchy too, but they aren’t related to the FACT Act, and they state clearly on their website:

When you order your free report here, you will begin your free trial membership in Triple Advantage® Credit Monitoring. If you don’t cancel your membership within the 7-day trial period, you will be billed $14.95 for each month that you continue your membership.  

To get your free, FACT Act Annual Reports, go to: www.annualcreditreport.com


Your credit score isn’t on your free annual reports.  Here are a couple of free resources that I’ve found and used:

 


WHAT DOES THIS MEAN?!


Experian  says:


Most credit scores fall between 600 and 750.  In general, a score above 700 usually suggests good credit management. 

TransUnion says:


If your credit score is above 700 you will probably qualify for a preffered loan. Under 650, you may have trouble receiving new credit.

 


How Do I Improve My Score?


The short answer to this question is: time.  But you’re probably looking for the long answer.


1. Check your report for innaccuracies regularly.  Find any?  Go here and learn how to correct them. 


2. Pay your bills consistently on time; all of them.


3. Keep credit card debt low.  TransUnion & Experian recommend keeping your balance below 35% of your credit limit.   


4. Don’t close your oldest account.  You want a nice, long credit history. 


5. Experian recommends: “Pay off debt rather than moving it around.  Also, don’t close unsued cards as a short-term strategy to improve your credit score.  Owing the same amount but having fewer open accounts may lower your credit score.”


6. Trans Union advocates: Avoiding excessive inquiries A large number of inquiries occured over a short period of time may be interpreted as a sign that your are opening numberous credit acoouts due to financial difficulties or overextending yourself by taking on more debt than you can easily repayApply for new credit in moderation.”


 


Is your credit score bad?  Because you look like a 10 to me.


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