Wednesday, January 27, 2010

My Take On Credit Scores

I've always read that when you closed a credit card account or paid off a debt it lowered your credit score.  So I'm thinking that we'll be close to zero by the time our debt is at zero, too!  Here's a link that explains credit scores-click here.  Any thoughts on this?  It really flies in the face of what we've been taught.

Now, I've also been advised to check my credit score once a year to make sure it's accurate.  I certainly don't want anything on there that shouldn't be.  There's those catchy commercials with the mullet-haired guy singing about free credit reports-those are scams!  You have to sign up for a program that costs you money.  Don't do it.

So, everyone can check their credit report for free once a year.  I learned about this from consumer advocate,  Clark Howard.  You can check the link to his site and find the link to get your free credit report here.


  1. Actually, you can check it three times a year -- because you can get a free report from each of the three major credit reporting centers. AND if you are married and have all of your debt jointly, you can technically peek at it 6 times a year. An example of how I stagger ours would be:
    January - Equifax - B.;
    March - Experian - J.;
    May - TransUnion - B.;
    July - Equifax - J.;
    September - Experian - B.;
    November - TransUnion - J.

    You don't get a free look at your FICO score, but if you really must know what that is (as in, you're preparing to purchase a house or a very large ticket item), it's only about $12 to take a look at it.

  2. Thanks Jessica! Have you ever found anything that shouldn't be on there? What a rip-off to pay to look at your FICO score! That's info that should be privy to the person who "created" that score.


  3. We've been very fortunate to have only the things which belong to us on our reports. But with the prevalence of identity theft, I like to watch our information.

    I think having to pay for FICO is all the more evidence of how it is not a true reflection of what's going on with one's credit. I've never paid for it, even when we were purchasing our house. So "bah!" to FICO!

  4. Erik said the 'hit' to your credit score should be short-term, not long-term, so you shouldn't worry about it. He also said that closing accts. doesn't necessarily lower your score, it's when you close a bunch at once, or a few other things that make it look like you are 'short on $$' for the moment. But he said overall it won't hurt you.

  5. I think it will take a while to register any effect on our credit score, but I do plan to close out all of them as we pay them off. All but one, that is (Mike uses it to buy airline/hotel tickets for a board he's on and has to travel a few times a year with it-they reimburse him). I've read that a lot of people living the debt-free, borrow-free lifestyle for a long time (usually older folks) have low (or no) credit score because there's nothing to report! Yet it "looks" bad even though they've been responsible with their money. For us, ideally, we plan to not borrow again so a credit score will be a moot point. Maybe I'm living in a dream world, but this is a goal we've set.