In the past decade or so, there has been a tremendous sales pitch out there to know your credit score! Again, another multi-million dollar operation by the credit bureaus and others to sell you information that is basically useless, unless you intend on making a major purpose such as a car or a house. Other that that does anyone else really care what their credit score is? Apparently they do.
To us, it is just another marketing tool by the three major credit bureaus, Experian, Equifax, and Trans Union, to sell you a product and make money from you for some piece of useless information. That said let us explain to you what is a credit score and how it affects you.
Credit scores range from a low of “300” to a high of say “850” with 650 being the medium in the U.S. today. In 2009 the median credit score was 723, while a score of 620 seems to be the magic number when determining whether or not you are credit worthy or a risk to lenders. Finally, a credit score of 650 or below is considered risky by most lenders and would require additional information from a lender in order to qualify for a credit card or a loan.
One of the primary companies that issues credit scores is called Fair Isaac or FICO score. They state that the agencies such as Fannie Mae and Freddie Mac, which buy mortgages from banks and resell them to investors, have indicated to lenders that any consumer with a FICO score above 620 is good while consumers below 620 should result in further inquiry from the lender. Once you get into the higher levels, lenders do not really care how high your score is or is not.
Again, unless you are applying for credit or making a major purchase, your credit score is meaningless. However, good marketing by companies that sell you your credit score, have made it appear that your score is the end all of your life.
Put simply, the higher your credit score, the easier it is to get credit and typically at more favorable rates than other people. Approximately 90% of all of our clients had high credit scores at one point in their lifetime. As a result, they were issued more and more credit. Then, through no fault of their own, they fell into what we call the debt trap, whereby you can no longer even keep up with the minimum monthly payments on your debt any more. So we ask ourselves, Did having a high credit score help them, or hurt them in the long term?
We suggest you not fall into the credit score trap. Do not worry about what your score is or was. Work on getting out of debt first with a company such as Nationwide Debt Reduction, Inc, and we assure you, your credit score will take care of itself. They can be reached at 800-890-6658.