1. You don’t need to pay to see your credit report.
Most of us have been charged to pull our credit report at some time, or go onto one of those “free” sites, only to be hit with a $15 hidden fee to see the full report. But according to the Fair and Accurate Credit Transactions Act (the FACT Act), you are eligible to receive a free copy of your credit report once each year from each of the three major credit bureaus by going to annualcreditreport.com. This will show your credit history, not your score, but at least you’ll be able to monitor your credit activity and make sure you’re on track.
2. A good credit score goes a long way.
These days, a good credit score affects more than just applying for a loan, it can impact what mortgage programs you qualify for, your insurance rates (depending on the state you live in), eligibility to rent a house, and even your employment. Yes, many companies, especially in financial services, are pulling a potential employees credit reports, seeing if they are a good steward of their finances.
3. Pulling your own credit report does not hurt your score.
Sometimes people are scared to pull their credit report, thinking it will lower their score, but that’s not entirely true. You can check your own credit report and score without negatively affecting your FICO, however getting your credit pulled frequently by credit providers (credit card companies, auto dealerships or home loan officers) may lower your score.
4. The “Big Three”.
Equifax, TransUnion and Experian are independent bureaus who each report a consumer’s credit seperately, and calculate a FICO score. People often see all three bureaus reported on one report, so they don’t realize it’s not all the same. Since the bureaus each formulate a FICO score differently, your scores can vary based on credit bureau.
5. Maxing out your credit cards will hurt your scores.
Even if you stay within your credit limit and pay your bills on time, maxing out a credit card will hurt your score. According to data released by the company behind FICO, maxing out a credit card will lower your FICO credit score by 10 to 45 points, even though you technically haven’t done anything wrong!
6. You can always improve your score.
It’s important to be proactive about your credit, not reactive. Negative items fade in importance with time, and do not stay on your credit report forever. You can counteract negative items with positive practices, and so even if you’ve gone through a bankruptcy, short sale, foreclosure, or had a spell of missed payments, you can actively increase your score.
7. Late payments are not usually reported until 30 days overdue.
In a perfect world, everyone would pay their bills on time, but even if you miss a payment by a few days it won’t necessarily hurt your credit score. The 30 day mark is usually the important cutoff when late payments report to the bureaus, and negatively affect your credit score. So even if you are a little late, make sure your payment is in well before the 30-day delinquent mark to protect your credit score.
8. Paying off and closing an existing account can hurt your credit score.
Common sense might dictate that paying off an existing account to zero balance and closing it would make you less of a credit risk – and therefore increase your score. However in reality, it’s the opposite – this may have tinkered with your debt-to-balance ratio, which may lower your score.
9. A credit score and a credit report are two different things.
Although credit history and credit score, or FICO, appear on the same report, they are not the same thing. Your credit score shows your history of using credit, including accounts you have opened and closed, credit limits, payment history amounts owed, and defaults. A credit score is tallied based on these factors and more, so your credit history determines your credit score, but not vice versa.
10. 10% is the magic number.
If you want to increase your score you don’t have to pay your debts off to a zero balance. Instead, pay them down at or below 10% of what your total balance is. That will be seen as responsible credit use by the bureau’s scoring system, and increase your score.
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Do you have questions about your credit score? Blue Water Credit offers a complimentary consultation, so get in touch and say hello at:
916-315-9190
contact@BlueWaterCredit.com
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