I’ll touch on credit scores in this installment. Ever see the commercials on television about getting your credit score? Normally with a cute jingle and funny story? Here’s a hint, if they are advertising getting your score for free – their making money off you. Most of those ads give you a credit report for free – but only if you sign up for a monthly monitoring so it’s really not free.
Credit scores are confusing. As we spoke about before, credit agencies gather information about you. They assign values to that data - your credit score. In fact there is no one credit score, but many based on the needs of companies who buy data about you. As an example, insurance companies looking to evaluate your risk of accidents will consider different factors than credit card companies will.
If you contact a credit agency and purchase your credit report with a score, you’ll generally get a different score than a lender recieves (here’s my special rant; in 21 years of financing I have found that the credit agencies ALWAYS gives the customer a better number than they provide to a lender. I can’t tell you the number of times that a customer comes to me with a 705 credit score and when we check their information, the score is 50 points less).
Rather than sign up for monitoring of your credit (for lots of reasons, I think it is bad idea), you can get a copy of your credit report from www.annualcreditreport.com. This is sponsored by the Federal Trade Commission and is legit and really free. It won’t give you a credit score, but will let you know what’s on your credit report.
In future issues, I’ll talk about what makes up a credit score, how to deal with bad information and how to improve your credit.