How Britney Spear's Kids Can Teach You to Get Cheaper Car Insurance, the Best Cell Phone Rates and Get Hired More Often
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If Your Credit Card or Loan is Too Young or Neglected ... You Could Lose More Than Just Points on Your Credit Score
We have probably all heard enough stories about Britney Spear's and her kids to last a lifetime, so I'll apologize in advance for one more article that references this sad story. The question, you may ask, is "What on earth could Britney Spears or her kids have to do with my credit score?"
Truth be told, they could actually have a lot in common...
Britney's kids are very young. If your credit file only has accounts you have opened an the last two years, then your credit if considered "young."
Why would this matter to you? Well, if you have very few credit accounts, if your credit history is comprised of very little activity or if your credit cards or loan accounts have been opened and active for less than two years, your "young" credit lines may have a negative bearing on your credit score.
Secondly, if any of the media coverage has been correct, it seems Ms. Spear's kids may have been neglected from time to time. Granted, she seems to have medical problems beyond her control, but neglect can impact lives in a big way.
You, too, can neglect to be aware of how your actions can impact your credit score.
"So what?" you may say. "It's just a number, right?"
When you let memory lapses or sloppy checkbook entries cause a missed payment or two, you may be surprised to discover that your neglect has affected much more in your life than just your the three digits of your credit score.
You may find your potential employer "taking a pass on you" when hiring for that job you really wanted. Yes, employers interviewing you very often do take a look at your credit file when deciding on whether or not to hire you. They are blocked from viewing your date of birth, your account numbers and your spouse's information, but the rest of your file is fair game in your evaluation ... legally!
You may also be shocked to discover that a good credit score will help you get lower auto insurance rates, cheaper homeowner's insurance, better cell phone contracts and even reduce the deposits you are required to pay when setting up utility accounts
Pretty surprising, huh?
Truth be told, they could actually have a lot in common...
Britney's kids are very young. If your credit file only has accounts you have opened an the last two years, then your credit if considered "young."
Why would this matter to you? Well, if you have very few credit accounts, if your credit history is comprised of very little activity or if your credit cards or loan accounts have been opened and active for less than two years, your "young" credit lines may have a negative bearing on your credit score.
Secondly, if any of the media coverage has been correct, it seems Ms. Spear's kids may have been neglected from time to time. Granted, she seems to have medical problems beyond her control, but neglect can impact lives in a big way.
You, too, can neglect to be aware of how your actions can impact your credit score.
"So what?" you may say. "It's just a number, right?"
When you let memory lapses or sloppy checkbook entries cause a missed payment or two, you may be surprised to discover that your neglect has affected much more in your life than just your the three digits of your credit score.
You may find your potential employer "taking a pass on you" when hiring for that job you really wanted. Yes, employers interviewing you very often do take a look at your credit file when deciding on whether or not to hire you. They are blocked from viewing your date of birth, your account numbers and your spouse's information, but the rest of your file is fair game in your evaluation ... legally!
You may also be shocked to discover that a good credit score will help you get lower auto insurance rates, cheaper homeowner's insurance, better cell phone contracts and even reduce the deposits you are required to pay when setting up utility accounts
Pretty surprising, huh?
"So, if my credit score is 610
instead of 810, does it really
make any difference in my life?"
Credit Scores Are More Than Just Numbers
A few of the reasons to keep good credit scores ... they'll possibly help you with:
- Job search competition
- Lower interest rates
- Cheaper insurance premiums
- Better deals on cell phones
- Lower utility deposits
New VantageScore vs. Current FICO® Credit Scoring Models
Equifax, Experian and TransUnion are the three credit reporting companies. Each is a private firm that tracks your borrowing activity, which includes all your credit accounts, balances and payment habits.A credit "score" is produced by a formula inside their system. There are many different credit scoring systems used by lenders, but the scoring model most favored until now was created by Fair Isaac, another private company. Fair Isaac's FICO® system assigns a weight to the different factors in your credit file and produces an indicator (score) of how much risk you may pose as a borrower.
Credit scores use information from three key areas of your credit report: account information (like credit cards, student loans, auto loans and mortgages), public records (like any tax liens or bankruptcies) and inquiries (requests by potential lenders to view your credit). Any information about your race, gender, where you live and marital status are not used in calculating your credit scores.
Every time a furniture store, credit card company or a car dealer asks one of the credit bureaus for your credit score, the data the bureau has collected about you is sent through a credit scoring model.
New FICO® 08
Not only has the subprime meltdown made almost all credit harder to come by, but Fair Isaac has recently announced changes to the way it calculates its FICO® credit score.
Why should you even care?
Some behaviors that didn't hurt your score much in the past could now cause your numbers to plunge ... and other actions could help you boost your score more than they might have before.
These may impact your score:
- Applying for new credit accounts may not impact your score so much.
- Keeping high balances on your credit cards could hurt you more.
- It could be more important to actively use credit accounts you currently have.
- Maintaining both revolving and installment accounts could help your score, since the new formula is more sensitive to your ability to handle different types of credit.
This new "FICO® 08" will remain the same in many ways. Most importantly, it will keep the same 300 to 850 range as the classic FICO® score in widespread use today, with higher scores indicating lower risk of default
New VantageScore System
Recently, the three credit bureaus announced they will be offering a new credit-scoring system called the VantageScore. This will be the first credit score developed jointly by the three repositories. They present this new model as easier for borrowers to understand and more "consistent" than other scoring methods that have existed before. It will supposedly be consistent because all three credit bureaus will offer the same model.
The new VantageScore system uses the same underlying data about your debts as the FICO® score, but has a scoring model that resembles a scale with which most of us are quite familiar ... the academic model of grading.
Without comparing VantageScore directly to FICO®, the three bureaus are saying the new scoring model will be a better way to grade people with limited credit histories.
The classic FICO® scale is from 300 to 850. The cut-off lines for horrible credit vs excellent credit are really blurry and subjective in this model.
800-850 Excellent
751-799 Probably Prime
701-750 Likely Good
620-700 Pretty Much O.K. or Average
300-619 High Risk or Sub-Prime
The new VantageScore starts at 501 and runs to 990. It is designed to be much more structured:
o A: 901-990 Super Prime
o B: 801-900 Prime Plus
o C: 701-800 Prime
o D: 601-700 Non-Prime
o F: 501-600 High Risk or Sub-Prime
Fair Isaac offers a Free FICO® Credit Score Estimator through the MyFico.com website that can show you how your credit score might be affected when you do certain things. If you try out this "simulator," understand that the results you'll receive are only a range and not an exact answer.
You can also check out how your new VantageScore might be affected by doing different things by going to the VantageScore Illustrator at the Experian.com website.
This site also shows how the new score is weighted by the components of your credit file:
. 32% Credit History
. 23% Credit Usage
. 15% Balances
. 13% Depth of Credit
. 10% Length of Credit
. 07% Recent Credit
100% Total
Each of these areas is evaluated and weighted by these percentages in calculating your total VantageScore.
FICO® or VantageScore Fun Tools
Fair Isaac offers a Free FICO® Credit Score Estimator at the MyFico.com website that shows you how your credit score might change when you do certain things.
You can also learn how your new VantageScore might be impacted by your actions by checking out the VantageScore Illustrator at the Experian.com website.
Grab Your FREE Credit Report Every Year
You are entitled to ONE free credit report from EACH of the 3 consumer credit reporting companies every 12 months.
By Federal mandate, you are eligible for a free credit report through the Annual Credit Report Request Service. Additionally, consumers in some states are eligible for a free credit report under their state law.
The following states have laws that make free credit reports available to consumers: Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont.
The following states have laws that make free credit reports available to consumers: Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont.
- Get your Free Annual Credit Report Here
- .
AnnualCreditReport.com is the official site to help you obtain your free credit report. It is a centralized service for consumers and was created by the three nationwide consumer credit reporting companies - Equifax, Experian and TransUnion.
You're entitled to receive ONE free credit report every 12 months from EACH of the nationwide consumer credit reporting companies through the Central Source.
It's your choice whether you order all 3 credit reports at the same time or order one now and others later.
The advantage of ordering all 3 at the same time is that you can compare them. But remember, you won't be eligible for another free credit report for 12 more months.
On the other hand, you may want to just order one now and others later ... maybe plan to order one credit report every four months. This way you can keep track of any changes or new information that may appear on your credit report as your life and situations change.
Remember, you are entitled to receive ONE free credit report from EACH of the nationwide consumer credit reporting companies - Equifax, Experian and TransUnion - so if you order from only one company today you can still order from the other two companies at a later date.
If you'd rather not use the online service you may request a free annual credit report by phone or mail. Hearing impaired consumers can access a TDD service at 1-877-730-4104.
AnnualCreditReport.com will not approach you via email, telemarketing or direct mail solicitations.
Your Credit is an Extremely Valuable Asset
You should watch and manage your credit file just like your investments and retirement accounts. In fact you may be overlooking many of your assets ...
Check out "Stop Sitting on Your Assets" by Marian Snow at a bookstore near you.
Here's my favorite link:
#1 Bestseller
Stop Sitting on Your Assets: How to Safely Leverage the Equity Trapped in Your Home and Transform It Into a Constant Flow of Wealth and Security
Amazon Price: $17.21 (as of 12/15/2009)
List Price: $22.95
Used Price: $3.82
Get an insight into ALL your assets and how you can leverage many of them you may be overlooking to enrich your comfort and your security.
You should plan to live to be 100 or more ... so, be sure you don't outlive your money!
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What Are the Best Actions to Raise Your Credit Score?
The experts tell us to do the following ...
What do you think are wise moves to improve your credit score. If you know of good DOs and DON'Ts that can result in a higher credit score, add yours below. Scour the web. Check the advice out. Be sure they'll be steps that will help and not hurt.
Always make your payments within the grace period to avoid extra late fees.
1 point
Being Too Thin Can Lower Your Credit Score
Please read my Hubpage: What Should Your Credit Report Not Have in Common with Paris Hilton, Keira Knightley, Kate Moss or Skinny Supermodels?
So much of the mainstream media focuses on famous skinny ... or almost anorexic ... public figures.
- Visit My Credit Hubpage: Being Too Thin Can Lower Your Credit Score
- Yes, Paris Hilton, Keira Knightley, Kate Moss and, of course, all those glorified supermodels strutting their thin frames on the runway. We almost glorify being thin and usually detest anything described as fat.
by MarianSnow
I'm a speaker, trainer and the author of the bestselling personal finance book series: "Stop Sitting on Your Assets."
My eclectic background has... (more)
My eclectic background has... (more)
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