Your credit score matters. You need to make sure you have the number you want.
Whether you like it or not, your credit score matters. It is a three digit code that follows you. It can affect not only your ability to take out loans and build up credit, but it may also affect your personal life as well.
WHAT IS A CREDIT SCORE
Before we talk about why it matters, I want to explain what your credit score is. Simply put, your three digit credit score is derived directly from your credit report. It shows how likely you are to repay your debts and do so on time.
WHY DOES YOUR CREDIT SCORE MATTER
Your credit score is vital when it comes to your financial health. It may be just a number to you, but it can make a difference in more than just finances.
1. Used for credit. Most people know that this is the reason a credit score matters. Lenders use this number to determine how likely you are to repay any debts. This is used by lenders, mortgage companies and credit card agencies. The higher your number, the better your chances of being approved.
2. Reduced interest rates. When you have a high credit score, you have proven to lenders that you not only repay your debts, but you do so on time. When they see this, they may offer you a lower interest rate. Having a good credit score can actually save you money, especially when your loan is long term.
3. Insurance. My husband and I recently had an insurance audit (if you haven’t done one, I’d recommend you do so). The one thing our agent did was ask us our current credit score. When we told him, he looked at our account and said that because of our high number, we could qualify for their preferred pricing, which would lower our insurance. In fact, our auto insurance was lowered by so much that we actually had a credit balance the following month. We even greatly increased our home owners coverage and our premium went up by $4 a year!
4. Renting an apartment. If you are not yet ready to purchase a home, you may need an apartment. Landlords often run a credit check to see how likely you will be to pay your rent on time. Having a low score my prevent you from getting the place you want. Or, it may require a larger deposit or additional fees out of your pocket just to score the apartment you want.
5. Cell phone. If you need a new plan, your cell phone carrier may run a credit check. Your low score might prevent you from getting the phone and the plan you want.
6. Employment. Yes, this is true. Some employers will run a credit check. These are usually jobs within the financial or defense sector.
WHAT IS A GOOD SCORE?
This is a big question many people have. They want to know if they have a good credit score or not. This graph shows credit score ratings from lowest to highest. Your credit score number will reflect the type of credit score you have.
It is important that you know your credit score. While you can request a free credit report annually, you will not be provided with your score. To do that, you will need to visit a site you can trust.
WHERE CAN YOU FIND YOUR CREDIT SCORE
As I mentioned above, this is not provided on your credit report when requested. You will need to use a reputable site to get yours.
Notice that I said reputable. That matters.
While you may see lots of ads for these companies, it can be a bit nerve racking trying to determine which one to use. There are so many companies out there, but I recommend Credit Sesame.
Before I knew about Credit Sesame, my husband had tried another site which offered a free credit score. Imagine our surprise when we saw a small charge hit our credit card the next month. Turns out it wasn’t really free after all! That has made us both pretty apprehensive about trusting anyone to give us our credit score.
I had read many reviews about Credit Sesame. With much nervous anticipation, I signed clicked to their site to read what they were about. The first thing that popped up was that there was no credit card required. I didn’t even have to enter it! I instantly realized that there was no way they could sneak in and charge me anything.
The thing I do want to point out is that while most lenders check your FICO score, Credit Sesame uses the Experian National Equivalency Score. This may mean a slight difference in the actual number, but they are both pretty close.
The next thing I was wondering was how do they make money? They don’t just want to give me my credit score because they are just that amazing. They actually do make money. The way they make income on their site is simple. They will show you various credit card and home loan offers. If you click on these offers, then they get paid.
The final concern I had was a hard pull on my credit. Every time someone checks your score or your credit, a note is added to your account. The more pulls, the more than hurt your credit rating. Credit Sesame actually does a soft pull. That means it is reflected no where on your credit report and can have no negative impact on it.
You can head over to Credit Sesame and check out their site yourself. Remember, this is 100% free for you to join (just don’t click on any offers and you’ll never pay a dime).
HOW TO IMPROVE YOUR CREDIT SCORE
If you find that your score is lower than you want, there are a few things you can do. I have a few articles which can help you do just that:
How to Increase Your Credit Score
How to Improve Your Bad Credit Score
Increasing Your Credit Score without a Credit Card
Here are some of the key points you will find in the above articles:
- Deal with past due debts. If you have a debt which is old and yet to be repaid, take the steps to get it taken care of. It may mean setting up a new payment plant or even settling on a reduced amount.
- Get a secured credit card. This is a card where you make a deposit to the lender. This is security for them, just in case you do not pay timely. They have no loss.
- Ask companies to report on your behalf. If you have never been late on your utilities, you can ask them to make a report on your behalf. They do not always do this, but they might. It never hurts to ask.
- Become a co-borrower on someone else’s card. This is what I did after I had filed my bankruptcy. My mom added me to one of her cards. Her good credit helped me to rebuild my own. It also helped me learn new discipline in borrowing and repaying.
Do you know your credit score? What are you doing to improve it?
Tracie is a stay at home mom to three young children; ages 8, 9 and 12. In November 2007, she and her husband decided to eliminate their debt and made many changes in their lifestyle to do just that.
