About Your Credit Score...

People often ask me about their credit score. If they know what their score is, then they want to know how "good" that is. If they don't know what it is, they want to know how to find out. Today, let's just start with the basics and work into the juicy stuff from there.

Firstly, there are 3 major bureaus that score credit, Experian, Equifax and TransUnion (for contact information go to my Resources page). These 3 bureaus are actually in competition with each other and each have a slightly different method of calculating the score, similar, but maybe 10-15% of the information or analysis is different.

The score itself, (often called a FICO) can range anywhere from 300 to 850, the higher it is, the better your credit history and record of paying things on time. The mathematical formulas that these bureaus use is to actually measure the likelihood that a person will become 90 days delinquent on their account in the next 24 months.

This brings me to my next point - the score is not always an accurate reflection of what's so. Companies (credit cards, mortgage companies, etc.) have to pay to update your records with the credit bureaus and therefore may not do it every month. If you have an account with inaccurate information, usually a simple phone call to that company to tell them to update and report to the credit bureaus will clear it up. So the score is really based only on what's reported, not what's actually so.

Also, a credit score takes into account how long you've had your lines of credit. For example, let's say you have 5 credit cards and one of them is 20 years old, the others are 5 years old or newer. Even if you never use that 20-year-old card, it is to your advantage to keep it active because it will bring up the average number of years for all your cards. Best practices is to use it maybe once every six months, even just to get gas then pay it off again. This way they will not report the card as "inactive", and the card will continue to report to the bureaus on a regular basis and have a strong positive influence on your score.

As you can see, there are many fine details to a credit-score and if you have a concern or questions it's best to talk to your lender or a local specialist. If you'd like a recommendation, just contact me & I'll give you some people to talk to. Here is the link for contact information for the three national credit bureaus.