Credit Worthy?

Happy New Year! It’s January 1^st, 2011 and you know what that means: “New Year’s resolutions”. Lots of people focus their resolutions around losing weight, getting healthy or getting more active in something they disregarded last year. Why not consider your financial health?

The economy is slowly bouncing back, and during this transition, it’s getting tougher and tougher to obtain credit to buy houses or other big ticket items. You may have been one of the thousands of people who received a letter from your credit card company in 2010 stating they were “lowering your credit limit” or “increasing your interest rate”. Just because you received one of those letters, doesn’t necessarily mean that your credit is bad.

Want to know if you’re in good shape or not? There are a couple things you can do.

  1.   Get your annual credit reports (for free) 

        2.      Get your credit score (for free)

You are eligible for one free credit report from each of the three major agencies:  TransUnion ®, Experian ® and Equifax ®. There are many websites that enable you to do obtain them. My preference is: https://www.annualcreditreport.com/cra/index.jsp . The site allows you to obtain all three reports at one time all from the same site. All reports are FREE. Keep in mind, you can only get each report free once per year. When you get your credit report, look it over with a fine tooth comb and identify any/all inaccuracies or discrepancies. If you’re lucky, there won’t be any, but there’s a chance (during this age of identity theft) that there are lines of credit on your report that you didn’t open or there may be a discrepancy about “late time” payments. If you find any, you must contact that creditor in writing to dispute the inaccuracy. This is how you clean up your credit. Also, most credit agencies will offer to provide your credit score for an “excellent price”, I suggest you pass up that offer and get your score the free way.

You are able to obtain your credit score for free whenever you choose. All you have to do is go to your place of banking (i.e. credit union or bank) and meet with a loan agent. Tell them you want to know your current credit score. Now keep in mind, they are “running your credit”, and it’s not good to have your credit ran often. Only get your credit score once per year (around the same time you obtain your credit reports). If you have your credit ran several times during a short time, it will cause your credit score to go down.

Now to the good stuff; How do you know if your credit score is good or bad? Well, I’m glad you asked. When you receive your credit score it will either be your “FICO” score or “Vantage” score. Here are the ranges and ratings. Compare your score to these charts to identify where you stand.

FICO Score	Credit Rating
760 – 850 700 – 759 660 – 699 620 – 659 580 – 619 Below 579	Excellent Very Good Good Below Average Poor Very Poor

               

Vantage Score	Credit Rating
901-990 801-900 701-800 601-700 501-600	A B C D F

Here’s what the credit scores are based on:

Vantage Score	FICO Score
– Payment History – Utilization – Balances – Depth of Credit – Recent Credit – Utilization	– Payment History – Length of Credit History – Amounts Owed – Type of Credit – New Credit

Once you have your credit report and credit score, you will have a better idea of where your credit stands. It’s important to know your circumstances because if there are some legitimate issues, you want to know about them so you can address them. Take charge of your credit situation and reap the benefits of having excellent credit. If you have questions regarding your personal credit situation, please seek expert advice. I hope you found the above information useful. Have a great 2011!

(The information in this article is intended for informational purposes only. It is published with the understanding that the author is not engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert assistance is required, please seek the services of a professional person.)