What Is My Credit Score?

19 Nov What Is My Credit Score?

Your credit score is an easy way for banks to charge you more money than you should have to pay. The wiki definition says your 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 likelihood that the person will pay his or her debts in a timely manner”. The problem is that Fair Isaac & Co., the company credited with developing the FICO score, relies on information gathered from credit reports. Stories abound how credit report information is full of mistakes. Hence, a credit score based in part on credit bureau information is, at the very least, suspect. For a discussion of the different scores available, see Jeff Micheal’s blog, FICO vs FAKO Scores.

But that does not stop companies from using the credit score to get into your pocket. In fact, the lower your score, the more you have to pay to borrow money. And even when you are not borrowing money, companies entice you to spend for information about your credit score.

My favorite financial information website is bankrate.com. Today, bankrate has a credit score estimator program. You answer a bunch of questions, and the program will predict a credit score range. Then, you will be asked to purchase software to calculate your own credit score [which you just did for free] along with other financial information. For $48 you can get the FICO Credit Complete version. For two bucks more, you get the Suze Orman platinum kit. What a deal.

Do you want to save your first $50 bucks today? Don’t buy either one. You really do not need to know your score. If you are going to apply for a loan, the lender will tell you whether it can qualify you or not, and at a specific interest rate. You do not need to know your score to know whether you want to accept that deal. You should be more concerned with how much that loan costs, in repayment terms.

In my business as a consumer protection attorney, I meet many clients who tell me about their good credit status. I ask them why they are in my office if they have such good credit. And they usually tell me they are having trouble paying a bill or many bills. Having money in the bank or a good income is the best indication of your ability to pay back a loan. And not borrowing more than you can afford to pay is the best way to protect your credit.

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Andy Miofsky, Esq.

Andy Miofsky holds the highest AV PREEMINENT rating from Martindale Hubbell Law Directory and a perfect 10.0 from AVVO. Andy is an Illinois consumer rights lawyer with offices in Granite City Illinois. Andy represents people with bankruptcy and student loan debt problems throughout the Southern District of Illinois since 1979.
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