Have You Seen Your Credit Report Lately

Within the past week my buddy Bob told me his plan to buy a new car within the next 6-12 months. After congratulating him I asked Bob did he know his credit score and had he seen his credit report recently? I received the proverbial “deer in headlight look” and he told me didn’t know his credit score and had never pulled his credit report.  What I told him next, leads me into today’s chat. 

Your credit score (also known as your FICO number) is based on such criteria as your bill paying history, employment history and how much debt you are carrying versus how much credit you have available (i.e. credit limit on cards or a bank line of credit, etc.). Based on how well we manage our debt will determine if we have a low or high credit score.  Simply speaking, if we pay our bills on time, that positively impacts our credit score, if we consistently miss payment due dates or have an account placed with a collection agency, this could have a negative impact. 

How can a low credit score affect us? Well, let’s go back to my friend Bob.  If Bob pulls his credit report and discovers he has a low credit score, Bob will have to pay a higher rate of interest on his car loan and will no doubt have to put more money down toward the car purchase. The lower your credit score, the more of a credit risk a financing institution will see you as and the more you will pay for financing via higher interest rates.

This is why it is important to check your credit report and credit score periodically so as not to run into unpleasant surprises when you try to finance a car or home. From experience, there are no hard and fast rules when checking your credit.  Every 3 years is as ridiculous as everyday but for me personally I like to take a peek every 6 months to make sure that items are not appearing on my credit report that actually belong to another Henry Jackson. I also want to be aware of any possible mischief that identity thieves can cause. 

So in closing, reviewing your credit report and knowing your credit score is essential and it is easy as going on Creditkarma.com and signing up for a free report.  Thanks for the chat. Till next time.

Hank

P.S. –For more information on what is a good and bad credit score, please visit http://www.freescore.com/good-bad-credit-score-range.aspx