2011 4 financial
AND WHY IT IS IMPORTANT
Did you know that your credit score is
perhaps the most important piece of
financial information about you? Your
report and score can determine whether
or not you can get a loan or open a bank
account, the interest rate on your loans,
the down payment required to activate
utilities, your ability to rent a house or
apartment and, in some cases, whether or
not you will be hired for a job opportu-
WHAT IS A CREDIT SCORE?
Your credit score is the score derived
from your credit report. This number is
supposed to predict the likelihood that
you will fulfill your credit obligations as employers, and lenders are seeing when if you’re on welfare, or if your report is
agreed. Generally, more recent informa- they review your credit report. In some inaccurate because of fraud, including
tion has greater weight on determining cases, there may even be errors on your identity theft (www.ftc.gov).
your score. However, bad or “negative” report that are negatively affecting your HOW DO I IMPROVE MY
accounts on your credit report (such as credit score and this is a great opportu- CREDIT SCORE OR MAINTAIN
bankruptcy or accounts in collection) nity to correct them and improve your A GOOD SCORE?
may appear on your report for up to 7-10 There are several ways to either improve
years in general. Scores range from 500 your credit score or maintain an already
(poor) to 850 (excellent). The higher There are several other ways to obtain high credit score. They include the fol-
your credit score, the better rates you a free credit report. Under federal lowing:
will get on loans, especially on a car or law, you’re entitled to a free report if a
• Pay your bills on time! This is
home! company takes adverse action against
the number one way to improve
you, such as denying your application for
HOW DO I GET A COPY ON your score. Because most bills are
credit, insurance, or employment, and
MY CREDIT REPORTS? recurring, meaning they come every
you ask for your report within 60 days of
Did you know that you are entitled, by month, this is the most consistent
receiving notice of the action. The notice
law, to one free credit report per year way to show that you are a respon-
will give you the name, address, and
from each credit reporting agency? sible borrower and are financially
phone number of the consumer report-
Visit www.annualcreditreport.com or stable.
ing company. You’re also entitled to one
call 1-877-322-8228 to obtain your free
free report a year if you’re unemployed • Keep your account balances low.
report TODAY! Please review your
and plan to look for a job within 60 days, By keeping your balances on credit
report. It can’t hurt to know what banks,
CREDIT REPORTING AGENCIES’ CONTACT INFORMATION
NAME ADDRESS WEBSITE
Experian PO Box 9556 www.experian.com
NCAC Allen, TX 75013
Equifax Information Services PO Box 740256 www.equifax.com
Atlanta, GA 30374
TransUnion PO Box 2000 www.transunion.com
Customer Disclosure Center Chester, PA 19022-2000
TransUnion Consumer Relations
cards low, you show potential lend- • Review your credit reports! Some- ONLINE CREDIT
ers that you are not relying too heav- times, credit reporting agencies RESOURCES
ily on credit to survive financially. make errors on your credit report. www.annualcreditreport.com
It also shows that when you do use Most of the time, these errors are Free annual credit report from
credit, you are able to pay it back in unintentional. However, they can 3 credit reporting agencies
a short period of time, making you have an adverse effect on your FICO www.ftc.gov
a much more attractive borrower. score. So, it is very important to Federal Trade Commission
Typically, you want to keep an ac- know what is on your credit reports (consumer protections)
count balance of no larger than 30% and to fix anything on them that is www.myfico.com
of your available credit. inaccurate by writing to the appro- Fair Isaac Corporation, the primary
priate credit reporting agency. You credit scoring agency. Obtain
• Limit the number of new credit FICO score for $15.95
should review your credit report for:
accounts you open. The more
credit accounts you open, the riskier – Errors CredAbility, formerly Consumer
you appear and this may harm your Credit Counseling Services, offers
– Accounts that are not yours
credit score. Avoid opening un- free counseling
necessary accounts, such as depart- – Reported late payments that www.finrafoundation.org
ment store credit cards (even if they were actually on time FINRA Investor
offer you 15% off your purchase!). Education Foundation
– Debts that you have paid
In the event that you do open new www.nfcc.org
off that are listed as still
credit accounts you may be better National Foundation for Consumer
off keeping them open and not using Credit (assists with helping find organi-
zations that offer credit counseling)
them than closing the account, as – Old debts (collections) that are
this shortens your credit history, still being reported but should www.frbsf.org/publications/consumer
which can also harm your score. not be
Federal Reserve Bank of San Francisco
Taking out student loans and loans www.creditinfocenter.com
to purchase an asset, such as a car or resources and tips about credit
home are not nearly as harmful as
new credit cards.
2011 6 financial
IMPROVE YOUR REVIEW YOUR PROTECT YOUR LIVE WITHIN
CREDIT SCORE CREDIT REPORT IDENTIFY YOUR MEANS
• Pay bills on time (the • Make sure there are no • Shred ALL documents • Create a monthly
best way to improve errors on your report. with your personal budget and stick to it!
your score). information on them
• If you discover an er- instead of putting them • Do NOT open new
• Keep credit card ac- ror, contact the credit in the trash. credit accounts unless it
count balances low (no reporting agency im- is absolutely necessary.
larger than 30%). mediately in writing. • Do not give out your
personal information to • SAVE, SAVE, SAVE! Al-
• Limit the number of • Make sure all accounts ANYONE unless it is a ways pay yourself first.
new credit accounts on your report are reputable organization.
you open. yours. • Prioritize your monthly
• If you bank, pay bills, or bills and pay the most
• Do NOT file for bank- • Make sure the same shop on-line, do not use important bills first.
ruptcy unless you HAVE negative account or obvious passwords and Start with your home
to. Consult a non- “charge-off” does not periodically change your and utilities and work
profit credit counseling appear on your report passwords. down from there.
service (i.e. CredAbil- more than once.
ity) before making that • Do NOT give out your • Avoid high-interest loan
decision. Remember, • Learn the laws around personal informa- products. Shop around
bankruptcy stays with Fair Credit Reporting. tion over the phone if for the best interest
you for 10 years and someone calls you, even rates and repayment
• Get your free credit terms.
can hinder your ability if they claim to be from
reports every year from
to buy a car, find a place your financial institu-
www.annualcreditre- • Never sacrifice a NEED
to live, obtain credit, tion.
port.com for a WANT. Remem-
and gain employment.
• Always review your ber, WANTS come and
• If you are denied credit go. NEEDS are forever.
for any reason, obtain
If you can, review
your free credit report
your statements on-
from the reporting
line. They are usually
agency within 60 days.
updated in real-time,
• If you are on TANF allowing you to catch
or a victim of fraud or errors quickly.
identity theft, you are
• Do NOT carry your
also entitled to a free
social security card in
your wallet or leave it
in your car. Keep it in
a secure place and only
get it when you need it.
• Do NOT respond to
unsolicited emails. De-
lete them immediately.
DON’T BE AFRAID TO SEE WHAT IS ON YOUR CREDIT REPORT!