Do You Know The Score? …and I am not talking about the hockey score, I’m talking about your credit score!
Many people have told me that they have a 4 star credit rating or Triple A credit. However, when I asked them what their credit score was, most of them didn’t know what a credit score was, or had any idea where to get it.
The difference between Credit Score and Credit Report
Some people have never looked at their credit score or credit report or even know what the difference is between them. You need to contact both Equifax and TransUnion. As they are not affiliated with each other, and don’t share information, your credit reports may be slightly different.
A Credit Report will show you a 3 year period of payments to each of your creditors, and how many times you either paid on time or were 1, 2, 3 or more months late with your payments. You can obtain one free copy a year of your credit report just by simply mailing in a request form which you can get from the Equifax website.
A Credit Score is a point system assessing what type of credit risk you are. You can obtain a copy of your credit score, by going to the credit bureaus websites. There are several factors that are considered in calculating your credit score. Knowing what some of those factors are will help you build your credit rating much faster. Did you know that your credit score has a direct impact on not just if you are approved for credit but also what interest rate you are offered?
Why you should check your credit report every year
Everyone should review their credit report and score at least once a year, to ensure their information is accurate. If you think the information on your credit report should be fine, think again. I know of many cases where the information was not correct, for a number of reasons. Two examples come to mind that demonstrate how important it is to know what is going on in your credit profile:
First example: A woman had her purse stolen. She reported the stolen credit cards to the credit card company, who cancelled the credit cards and issued her new ones. Several months later, she looked at her credit profile and saw that she had two of each card listed as active on her credit report. That might not sound bad to some people, but did you know if you have more than 4 active credit cards, you lose points? Furthermore, it raised her debt to income ratio – anytime you have more than 20% of your annual income in available credit – whether it is used or not – you lose points.
Second example: A gentleman trying to buy a home for the 1st time goes to a mortgage broker to get pre-approved. When the mortgage broker asked him “Have you been bankrupt – twice?”, the gentleman replied: “No, just once.” He told me getting that fixed took a lot longer than he thought it would. He also realized that it was probably the reason why he had a hard time getting a credit card.
How to rebuild your credit after a Consumer Proposal or a Bankruptcy
If rebuilding your credit after a Bankruptcy or Consumer Proposal is worrying you and preventing you from seeking relief from your debt problems, don’t let this stop you. We’re here to help! Our R-Plan will not only explain the important factors that go into rebuilding your credit score in a very short time span, but also how to use credit effectively without impacting your budget.
Would you like to learn how to rebuild your credit score and get out of debt? Schedule a free, no-obligation consultation with one of our debt reflief professionals, and learn about the quickest ways YOU can get of debt and rebuild your credit score!