Your credit score operates on the assumption that the near future will look a lot like the recent past, and that going forward, people can be expected to behave pretty much as they always have.
Since most people will exhibit the same basic behaviors for years at a time, be they good or bad, it's not hard for the people who build credit scores to analyze you and your expected patterns of future behavior. If you have bad credit today, it only stands to reason that you'll have bad credit tomorrow.
So just how important is your credit score? Janet Bodnar of Kiplinger's Personal Finance magazine explains…
Making sure your credit score is high is super important
This is especially true if you plan to borrow money to buy a home. Here are three more tips on improving your credit score fast from Stacy Johnson of Money Talks News…
Here is that website Stacy mentioned where you can get a free copy of your credit report to see what your history says about you. Go to http://www.AnnualCreditReport.com
You can get a copy of your credit report free from each of the three major credit reporting agencies each year. So get one now, then get another 4 months from now, and the third four months after that. This way, you can be checking on your credit report every four months for free, and not wait a whole year to see what's going on. For the most part, with a few minor exceptions, all three credit reports will have basically the same things listed about your credit history.
You pay your apartment rent on time every month. You never miss a utility bill. Your credit score, then, must be strong, right? Maybe not. The only way to know for sure is to check your annual free credit report.
Your three-digit credit score is one important number. Lenders of all types, whether they’re passing out a mortgage, auto, or personal loans, rely on it to determine if you qualify for their money and at what interest rates. A growing number of employers study your credit score when you apply for a job. Your auto insurer might use your three-digit score to help set your policy rate.
In other words, being stuck with a bad credit score – one under 700 on the popular FICO credit-scoring scale – can make life difficult.
Most troubling of all is that you might pay your bills religiously each month and still have a weak credit score. The problem? You might not be paying the right bills.
Credit reports don’t take into account how well you make such payments as apartment rents and utility bills. That’s because these creditors don’t report their findings to the bureau. This means even if you’ve never missed a rent or electric bill in 10 years, you might still have a low credit score if you don’t have enough other credit. The credit bureaus penalize consumers not only for missing payments and filing for bankruptcy protection but for not having enough credit, too.
That’s why it’s so important for you to view your free annual credit report each year. Your credit report will show you exactly what lenders see when they look at your credit history. It won’t show you your actual three-digit credit score – you’ll have to pay one of the three credit bureaus, Experian, Equifax or TransUnion, for that – but it will give you an idea of what your past financial history looks like.
The good news is you can get your credit report for free. By visiting the Web site AnnualCreditReport.com, you can order one copy each of your three credit reports – one maintained by each national credit bureau – every 12 months.
Just make sure you request these reports only from AnnualCreditReport.com. The other commercial sites promising you free credit reports are not to be trusted. Many of them require you to first sign up for a free trial of their credit-monitoring services. Then, if you don’t cancel this service after the free-trial period ends, you’ll find a monthly fee on your credit card. AnnualCreditReport.com, though, provides you with your credit reports free of charge.
Explore your free annual credit report to get the real truth about your credit history. You might be surprised at what you find.
If your New Year’s resolution involves your finances, a great first step is to check your credit report.
Vowing to manage one’s finances better in the New Year could be an appropriate resolution for almost anybody. You can get a bird’s eye view of what your finances look like simply by checking your credit report since it contains such a wide variety of important elements you may need to address in 2011. Checking your credit report is a must-do if your resolution is specifically raising your credit score.
One’s credit score is calculated by the 3 major credit bureaus (Experian™, Equifax™, and TransUnion™) by collecting information such as bill payment trends, outstanding debt and the number of open accounts from your lenders and creditors. Consumers should also be aware that the 3 major credit bureaus do not all report the same information so it is wise to see a report from each of them. Because this score affects whether or not funding is granted to consumers, having a good credit score is very important.
By checking your credit report, you will see a treasure trove of financial information. It’s also good to obtain your credit report prior to beginning any type of loan application, especially prior to starting the home mortgage process.
Get a head start on raising your credit score in 2011 by getting a free copy of your credit report. Everyone is entitled to one free report annually from each of the three credit bureaus. You can request your free credit report by going here.