Hello savvy savers! We’re talking credit scores again. Why? Because it is a major factor in what you can get out of life. It impacts your approval for loans, leases and so much more.

I hope by now that you all have received and reviewed one or all of your free credit reports. If not, I encourage you to do so. You can find info on my recent blog post here blog post, here 

Now, I’d like to share information about "Knowing Your Credit Scores".
 
What Is Your Credit Score?
Basically, your credit score is a three-digit number that represents how you have paid back money you have borrowed or how you used credit that have been extended to you. It summarizes your full report into three digits using a percentage scale.

You can obtain your credit scores from TransUnion, Equifax, and Experian. It is important to get your scores from each of these national credit bureau as more often than not the score may vary because the information in each is different.

Below is a breakdown of how each credit score organization works and how it can effect you:

The FICO Credit Score:
•    Calculated by Fair Isaac Corporation 
•    Used by most top lenders  
•    Ranges from 300 - 850.
•    The lowest number represents a low or bad score and the highest number is a high or good score.
•    A good credit score is 720
It is important to note, there are other types of credit scores, such as Vantage (2.0 and 3.) and Plus, and they use a number range and/or a letter grade as the measurement.

Below are the factors that affect your score:
1.    Payment history - 35%
This has the largest impact to your score; The secret to this one is simple - pay your bills on time. A few options that may help you pay bills on time are. It effects you negatively when making payments late.

2. Amount of debt or amount owed: 30%
This is the next largest impact to your score. Try not to have more credit card debt then you can afford. Work each month to pay the balance(s) in full.  A good rule of thumb is to not owe more than 30% of your credit limit. If you have a credit card with a $500 credit limit, try not to carry more than $150 if any balance if any at all. 

Negatives: Maxing out your credit cards effects your score negatively. “Max out” means your credit limit is $500 and your balance (amount you owe) is $500, the entire amount of the credit line. 

3.  Length of Credit History - 15% - How long you have had each line of credit is taken into consideration.

4. New Credit - 10%
Opening up too many accounts around the same time is not a great thing. Try to refrain from opening cards just because you get a % off the purchase the day.

5. Types of Credit or Credit Mix - 10%
It is good to have different types of credit, such as credit cards, mortgage, and car loan. It is not required but if you have a good mix and paying them all time then that is favorable to your credit score. There is typically a small charge to get your credit score from the national credit bureaus. 

Here are a few apps where you can get your credit scores for free.  When access your credit score from these apps be sure to know which the of score method they use. 

1. Credit Karma:  https://www.creditkarma.com where you can easily download on your smart phone and check you credit score for free.

2.Creditwise by Capital one: https://www.capitalone.com/credit-cards/benefits/creditwise/

3. Credit Sesame: https://creditsesame.com

Stay tuned for our next blog post, which will demonstrate how credit score can effect you in different scenarios! Be sure to follow us on Instagram, @itsmymoney_ .

Talk of credit can often make some people afraid or confused. This blog should help you answer some of the important questions and start your 2017 Financial Planning by getting copies of your credit reports!

Your credit report identifies you by:
• Your first name
• Your last name
• Your Social Security Number (SSN)
• Your addresses
• Your current and former employers

Your credit reports contains:
• All of the above items (1st and last name, SSN, addresses, employers)
• A list of business that have extended credit to you
• The amount you owe each business
• You payment history, have you paid on time, late or not at all 
• The length of time you have had each credit line
• And other factors regarding your credit obligations, such as judgement against you or bankruptcies

Who maintains all of this data? 

One or all of the three national credit bureaus:
1. TransUnion (www.transunion.com)
2. Experian (www.experian.com)
3. Equifax (www.equifax.com)

Creditors can report and update to one, two or all three of the bureaus. The bureaus should ensure the information is accurate but just in case you want to help them out by get copies of your credit report and reviewing for accuracy.


You may now be saying to yourself, since my credit report has so much information on me and my payment history, how can I get a copy to see what is on my credit reports.

Yes, you are entitled to a free credit report, every 12 months, from each of the three above credit bureaus. I encourage you to get a copy from each as oddly enough one may contain a line item that they other does not. I also encourage you to use the following strategy in getting your credit reports - get one from one of the three bureaus in January, in February get a copy from the next bureau and in March get a copy from the next bureau. Using this strategy will allow you to get all three reports, in three different months which maximizes how often you can see you credit history for free.


You can obtain your FREE credit report in one of three different ways:
1. Online at www.annualcreditreport.com: This one is most popular as you will see the results right away. I encourage you to print and file away. Highlight the date you pulled ti so you know you can get another one for free 12 month later.
2. Phone - 1.877.322.8228: This is a good option if you don't have access to a computer and printer. You will be asked a few questions to verify it is indeed you and then the report will be sent to you.
3. Mail: There is a form that you can download at www.annualcreditreport.com, complete and send it in on the address on the form and get a copy of the report mailed to you.  
When you receive your credit report, PLEASE review it thoroughly. 


Check things like:
• The spelling of your first and last name - is it correct?
• Your complete address - is it correct?
• The varies accounts listed - are they your accounts?
• Employer (current and former)  - are they correct?


What if something is incorrect on my credit report?
• You can dispute anything that is not correct. 
• The bureau must respond to you in writing within 30 days of your dispute.
• Their response should include the response to your dispute
• If the response reveals you are correct, then they should provide an updated credit report
• Please note, if you get a disputed corrected with TransUnion it will not correct the item on the Experian credit report. If the error is on another one of your credit report you will have to dispute it with the other bureau.
Monitoring your reports regularly will also help you detect any identity theft.

Your credit report is reviewed:
• When you want to buy a house
• When you want to rent an apartment
• When you want to buy a car
• When you are getting quotes for car insurance
• By some employers 
• When applying for credit cards
• By creditors you currently owe​

Based on the information contained on your credit report, you are given a Credit Score. This score will determine if you  are extended new credit, denied additional credit, reduced credit limit or extended credit at a higher interest rate.

Up next, blog on Credit Scores.....you don't want to miss it!