How can I find out my credit score? How are credit scores calculated?

It seems like lately you can’t sit through even one television commercial break without trying to be lured into getting a copy of your free online credit report and being pleasantly lectured about the importance of knowing your “credit score.” But of 1,000 Americans surveyed by the Consumer Federation of America, only one third fully understood what their credit score actually meant and the impact that it has not only on obtaining the obvious like car loans and mortgages, but also getting apartments and even jobs.

Credit scores are a somewhat blanket approach of letting potential lenders know overall where you stand with your credit. Using a rating of 300 to 900, it takes into account the obvious such as how timely your payments are and your credit account balances as well as how much unused credit there is on each account, how long you’ve been at your job and your residence. It also applies a rating to the age of your accounts, bankruptcies, and whether you’ve ever applied for credit counseling.

Seem reasonable enough? Well sure, if you’re applying for a mortgage or a car loan. But what if you’re trying to get insurance or a job? Yup, that’s right, now potential employers can check out your credit score. Employers maintain that it’s just another way of checking someone’s “background” much the same way they would check one’s criminal history. Unfortunately, unlike a criminal record, almost one third of all credit reports contain erroneous information that could be damaging enough to cause a denial in credit. Not only that, but marriages can have messy divorces leaving even messier credit reports behind. Sure, we can all accept problems with credit during the division of assists, but should we be denied unemployment for the vicious sins of our vindictive former spouses?

So what’s the best way to get a handle on your credit score? Each year you can get free copies of your credit reports from Experian, Trans Union, and Equifax (the big three in credit) by logging on to or if you get denied credit you can request a free credit report within 60 days of denial. For an added nominal fee you can also get your credit score. Review your report carefully and check for discrepancies. If there are errors it’s very important get these corrected as they will most likely effect your credit score.

Another thing to keep in mind is that credit reports are not etched in stone: sometimes you can strike deals with creditors so that you can clean up your credit faster thus raising your credit score sooner. For instance, if you owe Kookie’s Klam Shack $1,000, you’ve been way behind, and as a result haven’t been paying at all, sometimes you can get them to call the Big Three and wipe the slate clean and close the account in good standing IF you give them $200 a month for five months. It sounds steep, but it can save your credit rating and score big time.

Credit scores are even less stagnant, changing with every payment you make (or don’t), whenever you apply for a loan, and whenever there are credit inquiries made. So just because your credit score is low today doesn’t mean you can’t start fixing it today.

At the risk of sounding like all of the late-night ads that plague your television and prey on your insecurities, knowing your credit score really is the first step to all things financial – and more than just things financial than you’d have thought. Get on it, find out your score, and know what your credit says about you.

Author: Chuck Eglinton

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