In understanding what is a credit score the following are items that you may want to know about that can help you protect your credit scores and credit report.
Credit scores are not your credit report or credit history
Regularly check your credit
Checking your own credit does not hurt your scores
You have more than one credit score
You have your own credit scores and your spouse has theirs
Shopping for a mortgage or car loan does not significantly impact your credit scores
Applying for credit cards does hurt your credit scores
Closing accounts can hurt your credit scores
Credit repair is not a scam – but you must do it correctly
Financial hardship causes stress and fixing your credit can improve your stress levels
What Is A Credit Score?
Credit scores are numerical values that the credit bureaus assign you based on your credit report. You can think of credit scores as an indication of what kind of credit risk you are based on your past credit history.
If you have a credit card, or auto loan, or student loan chances are you have at least one credit score and most likely you have three scores; one from each of the credit bureaus – Transunion, Equifax, and Experian. The Credit Score Scale ranges from 350-850 with the higher the score the better.
Factors To Consider For A Good Credit Rating Score
With knowing what credit scores are, if you are aware of things that can impact your credit report and credit history you can better improve your good credit rating score.
Credit scores are not the same as your credit history or your credit report. Your credit history is what is found on your credit report. Your credit report is maintained by the credit bureaus based on what your creditors report to them. Creditors usually report to the credit bureaus monthly, although some you will find report only every quarter.
Regularly check your credit – you should do this at least annually even if you pay your bills on time. Errors are made all the time and identities are stolen all the time. No one is 100% safe.
Checking your own credit does not hurt your credit – while true that credit inquiries can hurt your credit scores, when you check your own credit you do not hurt your scores.
You may hear people refer to what is your credit score (or even the title to this article: What Is A Credit Score?) – what you need to know is that there are three scores and many credit decisions are based on the middle score. Not the average score but the actual middle score.
If you are married, you do not have the same credit report or credit scores as your spouse does. Credit reports and credit scores are recorded based on your social security number. Even if you have the same credit accounts as your spouse you will not have the same credit report. You may have similar reports and scores, but you will definitely have your own report and scores.
Shopping for a mortgage or a car does not kill your credit scores. Over the years there has been a lot of bad information out there about shopping for a mortgage or a car loan. In many cases this information was used to keep people from shopping through scare tactics. The credit scoring system has been changed for many years to allow for a consumer to shop for mortgages and car loans without significantly dropping scores.
Applying for credit cards and department store credit does hurt your credit scores. This is a true statement. Expect to see your scores drop after you apply for this type of credit. However, over time you will see an improvement to your scores. Note: do not apply for credit cards while shopping for a mortgage or a car.
Close accounts to improve your credit scores – bad advice this is. Part of the credit score calculation is how old your credit accounts are – the longer the better.
Credit repair is a scam – this is not true. What is a scam is when a company tells you that they can all negative information from your credit report. If you have accurate negative information that is legitimate it can be hard to remove. And if it is removed, chances are the creditor will report it again in the following months after if was removed. Make sure you are fixing mistakes and inaccurate information.
Stuff happens I should tough it out – well true – stuff happens, but toughing it out is not always the best way to go. Financial stress is tough on your physical well-being as well as your family’s. Debt settlement, foreclosure, bankruptcy, and consumer credit counseling may all seem like a chicken’s way to go, but stuff happens and these paths can lead to less stress and a quicker recovery. They were also designed and put into place for a reason – not to abused – but rather to help people who have had stuff happen make a fresh start.
Your credit report and credit scores are important for all types of things in life in the 21st Century. It is up to you to protect it for you and your family’s sake.