Credit History and Credit Score- why it is important to know it!

(this is the transcript of the video posted on Youtube. The link is here: https://youtu.be/JcIPzUW1Lz0


 Today I’d like to talk about something that affects all of us:  our credit history.

2.       If you’ve ever had a credit card, a loan, utilities in your name, or a cell phone with a monthly bill, you probably have a credit history. You have it because those companies share information about you.

3.       Your credit history describes how you use money.  It includes how you pay bills – do you pay on time or late?  It includes how many credit cards and loans you have, and how much money you owe.  All that information goes into your credit report, which is a summary of your credit history.

4.       Your credit report will show your credit cards and loans, how much you owe, how you pay your bills.  It also shows your name, address and Social Security number. It also has a section called “Inquiries,” which shows where you applied for credit.  In a minute we’ll talk about how that works.

5.       Did you know that businesses check your credit report whey you apply for a job?

Since they’re making decisions about us based on what’s in our credit report, shouldn’t we make sure that the report is right – and that the information actually belongs to us? So, how do we know what’s in our report? 

6.       You can get your report each year, for free from all 3 credit reporting companies: Equifax, Experian and TransUnion. 

But there’s only one place to get the free report.  That’s Annual Credit Report. You can get it online or by phone.

7.       When you get your report, take some time to go through it and check for accuracy.  There’s a section for “Negative information” – that’s where you might find late bills or collections.  This section tells you what might be hurting your credit.  You’ll want to fix it if the information is wrong – or work on improving it

8.       When you look at your credit report, you can tell what your credit history looks like.  In fact, the report usually tells you how you can improve your credit, if there’s anything to improve.

9.       To improve your credit, you’ll need time.  It’s really do-able, but it’ll take at least 6 months of doing things well to see any kind of change.  You can start by paying your bills on time. Every time a bill is late, it hurts your credit.  If you can make this a priority, you’ll really help your credit.

10.   If you owe money on credit cards, start to pay them off.  It’ll take a while, but if you’re paying more than the minimum payment and not using the card, you’ll see your balances go down.

11.   If you already have a credit card or two, don’t get new ones.  Having too many credit cards can hurt your credit history. But don’t close your older credit cards.  That can actually hurt your credit history.  If you need to close a card, choose a newer one.  It looks better to the credit reporting companies when you’ve had credit for longer.

12.   We’ve been talking about good and bad credit, and how you know what you have.  Some people like to know their credit score.  That’s a number related to your credit history, and it’s used by businesses to see if you have good or bad credit.

13.   Each of the credit reporting companies has a slightly different score, but in general, they go from a score of 300, which means you have bad credit, to 850, which means you have great credit.   Most of us are somewhere in between.

15     If you’re buying a car or a home, the lenders will get a copy of your credit score with the credit report.  The score makes it easy for them to tell, at a glance, whether they want to do business with you.  If you have great credit, they probably will.  If you have bad credit, they might not – or they will, but they’ll charge you a higher interest rate, since they might see you as a bad credit risk. 

17. But do you need to know your credit score?  I don’t have a yes or no answer to that.

If you’re about to make a big purchase – like a car or home, companies are going to look at your credit score. Of course, if you’re making a big purchase, hopefully you’ve already looked at your credit report and fixed any mistakes or problems.  But in that circumstance, you might feel better knowing the score that other people will be using. 

19. Otherwise, knowing your credit score might be interesting, in a “what do people think of me” way. But it’s based on the information in your credit report.  Once you know what’s in your credit report, and you have a sense of what your credit looks like, do you also need to see a number?

20. You’re the only one who can decide that. Seeing your credit score almost always costs money.  Ads sometimes say you can get your score for free, but there is always some kind of cost.  You might get signed up for a monthly credit monitoring service, or something else that regularly charges your credit card.  If you decide to get your credit score, be sure you know what you’re paying for.

21. Again, What’s really important, much more than a number, is what’s in your credit report.

Remember, you can get a free copy of your credit report once a year from each of the credit reporting companies.  But there’s only one place to get that for free, and that’s Annual Credit Report.  If you go anywhere else for a supposedly free report, you’ll get charged sometime, for something.

However you do it, it’s a great way to take care of your financial life. 

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