Thursday, April 26, 2018

MoneySmart Week: Your Credit Score

What’s your score? 730. 640. Do you know?

Developed in 1989, a credit score has become a crucial component for many financial decisions by individuals and financial institutions.

Its true name is a FICO score, which was developed by Fair, Isaac and Company. In observance of Money Smart Week, April 21-28, it’s time to learn more about your use of credit and its implications.

When being considered for a loan or mortgage, new credit card, renting property, and even a job, your credit score is likely to be one determinant of the final decision made.

Those with higher scores can pay lower loan interest rates or get the apartment or job!

Knowing your credit score is downright important.

Utilizing many factors, especially

  • payment history,
  • ratio of credit used to credit available on credit card accounts,
  • number of open accounts and their longevity, and
  • bankruptcy,
each of three national credit bureaus calculates your credit score. It can be different at TransUnion, Equifax and Experian based on the version of the scoring algorithm used and the data collected by the credit bureau.

Reviewing all three of your credit reports is an important way of being money-wise. Checking the accuracy of all of the information and finding out who has been checking on you allows you to evaluate your situation when considering additional accounts or borrowing.

Under federal law, you may request a free credit report each year from each credit bureau at www.freeannualreport.com or 1-877-322-8228. You will not receive a free credit score with the report, but that can usually be purchased online for less than $10.

Other sites can provide your credit report but there will be a charge for it.

Some individuals stagger their credit report requests every four months so that they can get new information throughout the year.

If any errors are found in the report, you may file a challenge with the credit bureau in writing and it must be investigated within 30 days. More information on the process for filing a dispute is located at https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports.

Conversely, too many credit card accounts can harm your insurance score. Many insurance companies set your premiums on your use of credit. The basic philosophy is that the more accounts you have, there can be a higher likelihood of filing false insurance claims.

Be Money Smart – take your credit’s temperature periodically to avoid scorching moments down the road.

If you have questions on credit issues, you can contact West Virginia Senior Legal Aid www.seniorlegalaid.org for assistance. To be eligible to talk to our staff attorney, you must be a West Virginia resident at least 60 years old and must be the one to call 800-229-5068. We’re here to help!

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