January 15, 2007


CREDIT SCORE - WHAT RANGE ARE YOU?
Unedited



I spent years hearing about the value of knowing my credit score. I was a responsible adult that had paid my bills on time and didn't often make charges on my card so of course I assumed that my score must be good. Imagine my surprise when I finally decided to check and learned that it was below "Fair" in the "Uncertain" range.

The definition from the online encyclopedia:
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person, which is the perceived likelihood that the person will pay debts in a timely manner. A credit score is primarily based on credit report information, typically sourced from credit bureaus / credit reference agencies.

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.

Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, employers, and government departments employ the same techniques.

Basically there is no real formula or rhyme or reason to how our credit scores are determined. But some items that we know influence the score are late payments, how long you've had credit and how many closed accounts you have on your report. The two that influenced me the most were the ratio of your credit used (balance owed) to your available credit limit and inquiries made on your account from other cards, stores or creditors.


Once I picked myself off of the floor from my "Uncertain" rating, I went about taking small actions around the items that I could. I realized that I had been continously transferring my credit cards to the 0% interest rate cards and each time I did that it counted against me. Even after transferring the cards, when the 0% offer was ending, I was still receiving other offers. But now the amounts I wanted they weren't able to give me at an interest as low as I wanted or in an amount I wanted. Whether I signed with them or not an inquiry was made and that lowered my score. (Keep this in mind when you go to your favorite clothes or appliance store and they offer you a deal in exchange for you filling out an application to receive their store (credit) card. Each of those inquiries will impact your score negatively. I stopped taking advantage of the offers I received which stopped the influx of inquiries.

Before starting my business, years had passed without me using my card, although paying the minimums, my balances negatively impacted my score because they remained close to their limits. Paying the minimum means most of what I pay each month goes towards the daily finance fees which means the balance is not going down significantly. I started paying double on my minimums which made the balances shockingly lower in a very short amount of time (ask me about the Bankers Secret).
By making these two changes, my score is 40 points higher and only a few points away from the "good" range. Yes, it's painful that I'm in the "Fair" range but I took action and am seeing the results. Now that I know my score and the elements that impact it, I have no doubt that as I continue to take action I will be able to work my way up to the "Excellent" range. The only thing keeping me "Uncertain" was my ignorance and assumptions.

I invite you to take action now. No need to sit with regrets or punish yourself or even take a lot of time being angry at the system. (That comment was mostly for me). Ten years later after doing that, your score will remain where it is. It's best to take action now. Don't assume. Go to www.myfico.com. The cost ranges from free to $15.95. Many of us have our free credit report from Experian, Transunion and Equifax but all the information in my report was accurate and up to date. Do the next step and get your credit SCORE so you actually know where you are! Don't be like me and have to pick your mouth off of the floor when you are trying to move forward on your financial dreams. When you start your business, purchase your house or car or want a good interest rate on a loan, start now developing your "Excellent" credit score so when the time comes your score can impact you positively!


PLAN OF ACTION
1) Get your credit score by Monday, January 21, 2008.
2) Choose at least one action you will take to aid in making your score higher.
3) Recheck your score in 3-6 months.



Thank you for letting me know the results for those of you that implemented the script from Emotional Money "Happy New Year" January 1, 2008 issue. It is a thrill to hear your empowerment around your emotions and your money!!! Much continued abundance!


Next week will probably be an "emotional" fix. Tune in to find out!


Thank you to my friends that have truly helped
me these last three weeks!!! Princess, Panther and I thank (meow) you!!



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