All About Your Credit Score
Your credit score. Do you know what it is? Do you know why it’s important? If you’re looking for a new place, you’ll need to have a credit check before your application for lease is approved. Before you buy a new car with financing, your credit will be checked. If you need a loan, yup, you guessed it; you’ll need to have a credit check. If your score is low, you might not be able to get the things you want or need. Keep reading to learn about what comprises your credit score, how to monitor your score, how to clean up a low score and how to keep a high one. What determines your credit score?
- Your credit score is based on your credit payment history. The best way to establish good credit is to simply pay your bills on time.
- Scores range from 300-850, with the average score around 678. Anything lower than 620 puts you in the “high risk” category, meaning you may be denied a lease application or loan to prevent default (non-payment).
- Negative claims and false information on your credit report will lower your score. Your score can also be lowered when a creditor takes information from your report to sell to another party or for any other unauthorized reason. These “impermissible pulls” are illegal and result in fines in court.
- Don’t open unnecessary credit accounts. Every check of your credit lowers your score and makes you appear riskier.
To keep your credit score high, establish a variety of credit accounts (school loan, credit card, car payment) and pay these bills on time. Even if you do this, sometimes errors may find their way to your credit report. Credit report bureaus do not investigate the information posted to reports. For example, if your name is the same as your father’s name, some of his credit information might be reported on your report and vice versa. False claims have also been known to find their way onto reports. For this reason it is very important to monitor your credit report on a frequent basis.
Here’s how to keep tabs on your credit:
- Adam Krohn, a consumer litigation attorney with krohnandmoss.com, recommends signing up for an online credit report service to monitor your report constantly. The three major bureaus- Equifax.com, Experian.com and TransUnion.com, allow you to try their service free for 30 days and then charge a fee of $9.95 per month. “They will literally email you anytime a change is made or an inquiry about your report is requested,” said Krohn.
- At the very least, take advantage of Uncle Sam’s law–the government requires the bureaus to provide consumers with a free copy of their credit report once a year.
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