Recently, I pulled my credit reports from Experian and Equifax. Actually, I accessed them from www.annualcreditreport.com (the website where you access your free credit report yearly; no catchy jingles or efforts to enroll you in a "not free" credit monitoring service here). As far as I can tell, all of the information is correct, which I'm relieved to see, especially considering that some 80% of credit reports contain errors. This time around, I did something that I've never done before: I purchased my credit score. The Fair Credit Reporting Act - the federal law that allows for us to access a free credit report each year - does not make concessions for us to get a free credit SCORE. So, I paid for it. A whopping $7.95. I was a little anxious to see it considering that I recently paid off my credit card balance; I wanted to see how this action would be reflected in my score. At any rate, I pulled the trigger too soon. The credit card account reflected my previous balance of $700+. What I'm a little bummed out about is that my credit score, at least according to Equifax, is "average;" my score is 723. What's more annoying is that I am just TWO points shy of having an "above average" credit score (725 to 759). For those of you wondering, a "high" credit score has a range of 760 to 850.
Nevertheless, I am relieved that I am not shopping for credit in the near future. If you're in the market for a car loan, mortgage, credit card, or any other credit product, it is appropriate for you to pull your credit reports (and purchase your scores) at least 3 to 6 months prior to your application to make sure your credit report is accurate. The purpose of the "lead time" is to allow you to make corrections in the event misinformation is present. Additionally, it may give you a bit more time to pay down your debt (especially on those credit cards). A few things I'd like to share with you about my experience:
|Additional information about credit can be found at ftc.gov.|
- You can get an estimate of your credit score for free by using a credit score estimator at bankrate.com, mint.com or creditcards.com. I've found these to be pretty on point (especially considering that they don't have access to the in-depth information present on credit reports; said information is used in credit scoring algorithms.)
- Your credit score is forever changing, so don't get hung up on the minor details. A score is simply a "snapshot" of your creditworthiness at one point. If you're not pleased with your own score, rest assure that a little time and a few well-directed financial actions will give you the results you want.
- It's cheaper to purchase your credit score when you're accessing them through annualcreditreport.com (although it is not required that you do so). I've gone to the individual credit reporting agencies (the big ones, anyways: Experian, Equifax and TransUnion) and myfico.com (where you can purchase your Equifax & TransUnion reports and scores) where the prices for scores ranged from $9.95 to $15.95 each. The price per score drops if you elect to purchase a bundle, but it's still not cheaper than $7.95.
Going forward, I will remain committed to paying off my credit card balance each month (no finance charges here!) and paying down my car note balance ASAP. When the time is right, we'll see how this conversation goes for my $31,000+ student loan debt!