October 27, 2020

Credit scores determine how one handles debt.

A strong financial position does not always equal a great credit score. And, in turn, a bad credit score does not always equal a poor financial position. It’s all about how one handles debt.

In most cases, I would think someone with no debt to be in a pretty good financial position. Since they do not have monthly payments, they do not need much income to live. In this instance, they also do not have a credit history.

This happened to my sister years ago when she tried to purchase her first home. She had no debt, was making a great salary as a nurse, but was unable to get a mortgage to purchase the home; it wasn’t because she didn’t have the income to pay the mortgage, it was because she had no credit history to show how she handles debt.

 On the other end of the spectrum, someone can be deeply in debt, making all their monthly payments, and have a high credit score. Although I certainly do not recommend generating unnecessary debt to create a credit score, you should responsibly create your own credit history.

The Importance of a Good Credit Score

Since most of us don’t walk around with a big wad of cash in our pockets to pay for everything, you want to make sure you keep a good credit score.

When applying for mortgage loans, car loans, or most other loans, credit scores are used to determine eligibility and your interest rate. It may also affect insurance rates for these items.

Although your credit score may not be an issue when renting a home, your credit history may be. In addition to renting a home, credit checks may also be performed for certain jobs and professional licenses. Blemishes in your credit may make you ineligible for that home or profession you had your heart set on. Keeping an eye on your credit score should help you stay on top of things.

Regularly monitoring your credit score can also help you identify unexpected changes such as identity theft and fraud.

Free Credit Scores

The Fair Credit Reporting Act requires each of the three major credit reporting companies (Equifax, Experian, and TransUnion) provide you with a free credit report once every twelve month, at your request.

Credit Karma

• Free Credit Score using TransUnion and Equifax
• Weekly Update if anything changes on your TransUnion credit report

Credit Sesame

• Free Credit Score
• Monthly Score Update using TransUnion credit report
• Daily Monitoring Alert if anything changes on your credit report
• Offer many financial tool for free

MyFICO

For more precise and detailed reports, MyFICO offers three packages. Ranging between $19.95 and $39.95 per month you can choose the package that meets your needs.

• Getting a free credit score is both fast and easy, so get yours today!
• Remember a credit score and a credit report are two different things!
• Although free credit scores may not provide the full picture, it is a good baseline for monitoring changes.
• Even though they don’t guarantee to prevent or detect identity theft and fraud, these tools can provide alerts to current activity.

Now is a good time to PIN this post, so you can refer back to it at any time.

Let me know how these tips work for you in the comment section below.

 I invite you to follow me on Facebook and Pinterest. If you find this information useful, please share with your family and friends.

Your Girlfriend,