How Much do You Know About Your Credit Score?

May 29, 2006 |

Most people know that their credit score is very important when they go to apply for a home loan; but how much to people really know about credit scores?  According to a recent survey, not very much:

Consumers Still Don’t Fully Understand Credit Scores

(May 25, 2006) — A new survey conducted by the Consumer Federation of America and Providian Financial concludes that American consumers understand credit scores better than ever, but most still are unaware of the basic facts about credit scores and their financial importance.

For instance, more than 75 percent of those polled mistakenly believe that they have the right to obtain their credit score for free once annually. This is true only of a consumer’s credit report, but not his/her credit score.

A large number of consumers also remain in the dark about the characteristics of credit scores, with only 27 percent understanding that scores measure credit risk–not credit knowledge, amount, or attitude.

When it comes to something as important as your credit score, you should try and make as much effort as possible to stay up-to-date on it.  This means not only monitoring your score, but talking with a financial professional or credit counselor who can advise you on how to increase your score. 

For me, I found that my bank, Bank of America, offers a service that will monitor my credit score at the three major credit reporting bureaus (Equifax, Transunion, and Experian), and then notify me by mail when there is any change in the score, positive or negative.  I pay a yearly fee for the service, but it is definitely worth it to me.

You can also get your score from MyFICO.  This site not only allows you to find out your score, it also has great information about how your score can affect your mortgage interest rate.

Monitoring your credit score is important for a few reasons.  One is that it can alert you to possible fraud or identity theft, and another is that it can tell you if the things you are doing are helping or hurting your scores.  If you want advice as to how you can improve your score, try talking to a financial professional or credit counselor.  You can learn more about improving your score and finding a counselor at The National Foundation for Credit Counseling.

Posted by Daniel | Filed Under Buying, Finance, News 

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