FIND OUT YOUR CREDIT SCORE AND IMPROVE IT
6. Find Out Your Credit Score and Improve It
A credit score is a number that tells lenders whether or not you’re a good risk. It’s basically a mathematical representation of your financial behavior, and it’s contained in files at three national credit agencies: Equifax, TransUnion, and Experian. These files, which include information received by the agencies from your various creditors, are called your credit reports. You’re legally entitled to one free report from each of the agencies every year. You should get them at www.annualcreditreport.com and check to make sure all the information included about you and your financial behavior is accurate.
You can think of your credit score as the SAT score of your financial abilities; the only difference is that unlike your SATs, your credit score is being recalculated all the time—and will have a huge impact on your life forever. If you want to qualify for a low-rate credit card, car loan, or home loan, and if you want to rent an apartment, get insurance, or change cell phone plans, your credit score will matter. To find out your credit scores from all three agencies (they often vary), go to www.myfico.com or experian.com. They cost about $16 apiece.
Once you’ve collected all this information, take steps to make sure your score is as good as it can be. The higher your score, the more likely you are to get a lower interest rate on a loan. The biggest component of your credit score is your track record for making on-time payments, followed by the amount of credit you’re using and the length of your credit history. One of the easiest, most foolproof ways to keep your score in good shape is to pay all of your bills automatically, which you can do online.
Crib Note #7: Think about buying a house or an apartment