sheknowsA good cred­it score is essen­tial to pros­per­i­ty. Your cred­it score not only impacts your abil­i­ty to get cred­it, it also impacts the inter­est rate you pay when you do use cred­it. Oth­er than lenders, oth­er com­pa­nies use your cred­it score. A poor cred­it score can dri­ve up the cost of your auto­mo­bile cov­er­age, or cause util­i­ty or rental com­pa­nies to increase the amount of your deposit. Employ­ers often pull a cred­it report and may use than infor­ma­tion to deter­mine hir­ing eli­gi­bil­i­ty. Wire­less or inter­net providers may increase your deposit or lim­it your options.

Man­ag­ing your cred­it score is a crit­i­cal house­keep­ing finan­cial house­keep­ing chore. To keep a good cred­it score, pay at least your min­i­mum pay­ment, on time, and restrict your cred­it bal­ances to less than 1/3rd of the cred­it avail­able to you. Every time to apply for cred­it your score goes down slight­ly, so avoid apply­ing for cred­it too often. Use one main cred­it card instead of keep­ing small bal­ances on many cards. Most impor­tant, pay your accounts on time and in full.

Annu­al­ly, you are enti­tled to a free cred­it report from the three report­ing agen­cies, Tran­sUnion, Equifax and Exper­ian. Access your free report at www.annualcreditreport.com.  Here you will see your pay­ment accounts and your sta­tus with each.  Elec­tric bills, park­ing tick­ets, cred­it card bills, home mort­gages, and more show up on this report.   Review your report care­ful­ly to make sure no one has report­ed a late pay­ment or unpaid bal­ance this is incor­rect.  If you do find errors, report them imme­di­ate­ly and make sure they are cor­rect­ed before apply­ing for cred­it.

Fair Isaac Cor­po­ra­tion takes this infor­ma­tion from the three report­ing agen­cies, and cre­ates your cred­it score or FICO® score, which ranges from 300 to 850.  This num­ber will allow cred­it card com­pa­nies, auto­mo­bile lenders, and mort­gage lenders to decide how much to lend you and at what inter­est rate.  The score is based on a com­bi­na­tion of your pay­ment his­to­ry, the amounts you owe, the length of your cred­it his­to­ry, how many accounts you have recent­ly opened, and the types of cred­it avail­able to you.

Fair Isaac Cor­po­ra­tion isn’t the only cred­it scor­ing com­pa­ny that pro­vides a cred­it scor­ing for­mu­la. A less­er known com­pa­ny, Van­tageScore Solu­tions has a for­mu­la that some agen­cies use.

Review­ing your cred­it reports is a basic mon­ey main­te­nance task. Just like you get an annu­al phys­i­cal, mark your cal­en­dar annu­al­ly to check your cred­it reports.

If you want to obtain your cred­it score (which is based on your cred­it reports), gen­er­al­ly you have to pay for that infor­ma­tion. A good prac­tice is to ask lenders to pro­vide you a copy of your cred­it score any time you apply for cred­it. Don’t be shy about ask­ing them how they viewed your score and what they see you could do to improve your score.

Learn more about con­sumer cred­it at http://www.consumerfinance.gov/

A good cred­it score means more mon­ey in your pock­et!