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3 things to know about your credit score


A poor credit rating can hurt your chances of landing a job, getting good interest rates, and even your chances of qualifying for an apartment or a mortgage. Taking control of your credit report is essential for living a good life.

Tip #1: Know what your credit score is and who determines it.

If you are going to take control your financial destiny, it’s important to understand what your credit score is and how the bureaus that provide your rating to lenders determine your score. Knowing how your credit score works will empower you to avoid any predatory lenders and credit improvement scams.The credit bureaus use a number rating system, usually between 300 and 850, that tells lenders how timely you are paying off your debts and how much of a risk you are.

The higher your credit score, the smaller the risk you are to potential lenders and the more likely you are to be given credit and get it at lower rates. If you score is under 600 you will often find acquiring credit difficult, while scores of 720 and above will generally give you the better rates. Typically high-risk lenders can see interest rates of 25% or higher, while people with scores over 720 can see rates below 15%. That 10% differential can make a huge difference in both your minimum payment amount and your total financed amount.

The credit score is provided to lenders by three bureaus. Credit bureaus arrive at a credit score from the information contained in your credit report. All three credit bureaus use slightly different methods to calculate scores and often you will have different scores with different companies. Credit scores are sometimes referred to as FICO scores. FICO is the largest and best known of several companies that provide software for calculating credit scores.

Information such as what types of debt you have, how much debt you have, how timely you pay your bills and your loans are given different weight in importance in tallying your score. Things like age, sex, and annual income do not count towards your score, although underwriters do take into account your income and weigh it against your monthly bills and deductions. Recent account activity, debts, length of credit, unpaid accounts, and types of credit are among the things that count the most in determining your score.

Tip #2: Know who to contact.

Taking control of your credit score requires getting a copy of your credit score and examining it to verify that you recognise everything that’s on it. The credit bureaus will never fix mistakes on your report on their own. You must contact them and often will need to provide details and proof of the error. Unfortunately, proving identity theft is often the responsibility of the victim. You should examine your report for items that have been paid off. Sometimes there is a lag in the credit bureaus finding out that a debt has been satisfied and the negative item can remain on your report longer than it needs to. You can find below the direct contact information of three major bureaus:

Equifax Credit Information Services, Inc

Address: P.O. Box 740241

Atlanta, GA 30374

Telephone: 1_888_766_0008


TransUnion LLC Consumer Disclosure Center

Address: P.O. Box 1000

Chester, PA 19022

Telephone: 1_800_888_4213


Experian National Consumer Assistance Center

Address: PO Box 2002

Allen, TX 75013

Telephone: 1_888_397_3742


Keep this information wherever most of your financial information is kept so that you can easily contact the bureaus whenever you see something on your report that doesn’t seem right. It may also be a good idea to contact lenders directly and ask them to make sure they have reported your payment history correctly.

Tip #3: Learn how to deal with collection agencies.

If you fall behind on your credit card or loan payments, you will have to deal with collection agencies.  If you owe your credit card company a payment that has been in default or very much past due, the credit card company or issuing bank will enlist a collection agency to recoup the debt. Some collection agencies will use threatening or harassing techniques to try to get you to pay. Knowing your rights and how to defend yourself against abusive collectors can make your life a lot less stressful.

Always get the full name of the person you speak with at a collection agency. Be honest about your ability to repay and try to work out a payment schedule or payment options. If at any point you feel threatened or harassed, say so. You have rights and threats are illegal regardless of your debt. If the collection agent persists, contact the company who is trying to recoup money from you directly.

Get the name of the collection agency and report them and the agent you spoke with to the Better Business Bureau. You have the right to refuse further calls from the collection agency and continue your communication with the lender directly.

Unfortunately, some collection agencies feel that bullying provides the best results. That’s why they prefer to contact via phone rather than written statement. It’s a good tactic to ask if they give permission for you to record the call. Even if you don’t have that capability, asking the question is likely to make the collector more polite and civil.

Worth noting: If your score becomes too bad you will likely start getting contacted by companies that say they can fix your score for a fee. These companies vary in effectiveness and sometimes can deliver results and save you money. However, there is nothing these companies can do for you that you can’t do for yourself if armed with the right information. Study all you can about the techniques used to address a poor credit situation. Make sure you do your research about any credit repair service before spending money that could otherwise be used for paying down an existing debt.

With a great credit rating, your financial life will be much easier.

Matthew Nappo

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