Consumers Urged to Pay Heed to Their Credit Scores This Summer

[Aug 13, 2007.]

 

This summer, financial experts are warning consumers that they need to pay particular attention to their credit scores - before it's too late.

Your credit score is a three-digit number which indicates how well you handle your debt. It can be as important as your IQ in determining your financial success.

The credit score can determine what kind of interest rate you'll end up paying for your personal loans, auto loans, mortgages, and credit cards. The lower your score happens to be, the more you'll pay in interest charges.

A report from the Consumer Federation of America and Washington Mutual indicates that less than 60% of Americans have their credit scores in their possession. Many of those surveyed also say they really don't understand their credit scores.

The FICO score is an invention of the Fair Isaac Corporation, and varies from 300 to 850. If you have a score under 600, it's considered to be poor. About one in six Americans have scores which fall into this category.

You can improve your score by paying your bills in a timely fashion and resisting the urge to become a spendaholic, as far as charge cards are concerned. The lower your credit card balances are, the more likely it is that you will have a lower credit score. You can obtain your score from one of the three main credit reporting companies—Equifax, Experian, and TransUnion. Although you can get your actual credit report for free, you'll have to pay up to $15 for your credit score.
As an alternative, when you apply for a loan, you might be able to obtain your score from the lender.

Financial experts say that, this year, consumers should remember that knowledge is power, and having knowledge of your credit score may be the first step to financial freedom. The more information you have about your personal credit picture, the better-equipped you'll be to improve your finances in the future.

Julie Ann Amos
August 13th 2007

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