For many people, it’s a little overwhelming to figure out how credit works, which behaviors affect credit, and what credit scores really mean. Recently, ScoreSense joined Montel Williams on his show, The Balancing Act, to help provide insight.
Chelo Colburn, Customer Care Director at ScoreSense, offered viewers a quick education about credit basics.
What Is a Credit Score?
Your credit score, a three-digit number between 300-850, is based on your credit report. There are three credit bureaus—Equifax, Experian, and TransUnion—and you have a credit report and score from each bureau, Colburn explained.
Financial institutions, credit providers and even landlords use the information in your credit reports to gauge your credit risk. For example, some lenders associate a lower credit score with a higher credit risk. Your credit score doesn’t just affect whether or not a lender will loan you money; it also affects the interest rate you will pay for a loan or a credit card, discounts on insurance, and utility deposit amounts.
Why Does It Matter?
Your credit score is “your financial resume,” Colburn said. It shows potential lenders your financial history as it relates to outstanding debt, what type of debt you have, and what your payment history is on those debts.
“Your credit is something you will utilize throughout life, such as applying for your first credit card, buying a car, or your forever home,” Colburn says. “You want to be aware of what your scores are and what is on your credit reports so that you can make them work for you instead of against you.”
Knowing what’s in your report also matters because 20% of credit reports include an error that can affect the score, according to a Federal Trade Commission study. It’s critical to understand your reports and scores from all three bureaus to make sure you can detect any errors, delinquent payments, and even potential account fraud, Colburn said.
She recommended monitoring your credit on a regular basis rather than waiting until you need to use your credit scores. If errors or fraud have occurred, by the time you need to use your scores, it could be too late.
How Can I Monitor My Scores?
As Colburn told Montel Williams and his viewers, ScoreSense offers an easy-to-navigate online platform that offers access to your credit scores from all three credit bureaus, along with insights into your credit history and analysis of your current data to help you understand what’s affecting your credit. ScoreSense also offers alerts to suspicious activity or changes to your credit, and has credit specialists available to provide guidance about your credit, explain how to dispute errors in your credit report with the bureaus, or provide explanations about your report.
“I know credit can be overwhelming and confusing, but having one place to go that breaks down all the information so that it’s easier to understand allows you to feel more empowered and makes it far less intimidating,” Colburn said. “Our customers are a priority, and we are here to help them along their credit journey, help them understand their scores, and make the process easy and less intimidating.”
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