All About Your Credit Score

While it'd be nice to live a "credit-free existence," it can be difficult to do so in today's world. Purchasing a house, a car or securing a loan typically requires some level of credit. The most commonly used credit score is called FICO, where credit scores range from 300 to 850, with the national average being around 723. These scores fluctuate over time, depending on a person's activities and the transfer of information, so naturally it's a good idea to get a free credit report each year to ensure your profile is up-to-date. Since the Fair and Accurate Credit Transactions Act of 2003, consumers are entitled to one free credit report a year from Equifax, Experian or TransUnion. However, that report comes with some limitations: You can see what items are on your report, but to see the actual score it will cost you $6-$16.  

The most common way people get poor credit scores is to miss a credit payment or to pay late. At the time you may think, "Who cares if it's just a few days late? They're still getting their money." However, once that lateness or missed payment is reported, a credit score can drop as much as 100 - 150 points and will take 24 months to be fully restored. To remedy the situation, be sure you bring all your credit accounts current, paying off late payments and always paying at least the minimum monthly fee, rather than waiting to pay it all at once. For many people, paying automatically through debit or setting a monthly cell phone reminder a week in advance are the best ways to ensure bills get paid on time.

In some situations, getting new credit cards is a good way to actually improve credit scores. If any of your cards have double digit interest rates, it's best to shop around for a better rate. Sometimes you can consolidate several other cards onto one low-rate card, like a Virgin Credit Card, which offers 15 months interest-free and a transfer fee of 2.98%. Another is Barclays, which has 14 months interest free and a 2.9% fee. However, be careful if you choose this route because your interest rate will be hit very hard if you miss even one payment. Also be aware that applying for numerous credit cards in a short amount of time will bring down a credit score as well. If you've had big trouble in the past, then you may want to look for a secured credit card, which is sort of like a debit account: you pre-pay and can only borrow what's guaranteed in your account, yet the positive activity is reported to the credit bureau.

Checking your own credit score will have no impact on your report. You can gather basic information at, which allows you one free assessment each year. Experian, Equifax and TransUnion are the three major providers of financial report information. Even though you won't get the exact number without paying, you may gather useful information that you could use at to see where your approximate score may fall. To improve your credit score, your first step should be to pay down your credit cards, then your loans. Do not close your credit cards because this will decrease your capacity. Make all your bill payments on time. Move some of your revolving credit card debt to installment debt if you can. For example, you can sometimes take a home equity line of credit and transfer it to a fixed 10-15 year pay off. If you need more assistance improving credit scores, try

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As of this year, there's a new credit rating model known as "FICO 08." The new model will be more forgiving of people who may have slipped on one payment but are otherwise in good standing. It also eliminates young students who wish to "piggyback" on their parents' good credit by appearing as an authorized user on a credit card.

"People tend to pull one credit score report and think everything is the same on all of them. That's not normally the case," says Howard Dvorkin, president of Consolidated Credit Counseling Services. He recommends reviewing credit reports from TransUnion, Equifax and Experian for the most accurate reading.