Tuesday, February 27, 2007
For What It's Worth: Credit Report
If you're in the market to buy a house or a new car, there's nothing more important than three little numbers. Seven's Craig Stevens says, For What It's Worth, it's important to keep score on your credit score!
WSVN -- John Marino thought he had excellent credit. That was until he applied for a mortgage and was turned down.
John Marino: "Yes, I was surprised. I didn't know that there was a problem. I didn't know there was anything wrong. I expected everything to be in good standing."
It turned out that John's credit score rating was low because of a mistake on his credit report.
John Marino: "Lenders can refuse to give you credit or any type of loan if your credit score is low, so it's very important people understand their credit score, and why it might be low."
Seven News financial expert Allie Jablon says credit reports are not always accurate.
In fact, a recent study found 79 percent of credit reports had mistakes. Twenty-nine percent of those mistakes kept people from getting credit, and a low credit score can really affect you when you're trying to buy a home or a car.
Allie Jablon: "So if you have a $20,000 car loan, and you have bad credit versus good credit, it's the difference between $10,000 over a five-year period of time."
Allie says that's why it's so important to know your credit score.
Allie Jablon: "And the best way to do that is simply to go on-line. There are several different web sites where you can find out your credit score. One is Fico.com, and the Fico credit score is the one most agencies use."
Fico scores range from 300 to 850.
720 and above is considered excellent.
620 and below is considered poor.
If your credit score is low, you need to find out why.
Allie Jablon: "Is it because you have too much outstanding debt? Is it because you haven't paid your bills on time? Or is it because there are mistakes on your credit report?"
You can raise your credit score by paying down your debt, if possible, paying your bills on time and avoid reaching your credit limits.
Allie Jablon: "You can either contact your credit card companies, and try to raise your credit limits, or you can spread your debt across other credit cards, so as to move away from your credit limit."
John straightened out his credit problems and now checks his credit report every six months.
John Marino: "You don't even know if this is happening if you don't keep checking your credit and updating it, and see if there's anything else out there that you don't know about, so that's basically what I learned to keep an eye on them."
Allie recommends monitoring your credit score at least once a year to make sure there aren't any mistakes.
FOR MORE INFORMATION:
Check your credit score at www.fico.com